The current tax system creates challenges that require comprehensive and far-reaching reform, stated Mr. Benchaaboun : 02/05/2019

The current tax system creates challenges that require comprehensive and far-reaching reform, stated Mr. Benchaaboun

Mr. Mohamed Benchaaboun, Minister of Economy and Finance, stressed, Thursday, May 2nd 2019 in Rabat, that the current Moroccan tax system gives rise to challenges that require a comprehensive and profound reform with consideration for the macroeconomic balances of the country. The objective is to guarantee a sound public financial management and meet the needs of citizens and businesses that claim tax fairness and the Kingdom's development requirements.

During a presentation before the Council of Government on the 3rd National Conference on taxation, the Minister pointed out that these meetings are intended to contribute to the social debate around the model of development that HM King Mohammed VI called on to establish. They also demonstrate that the fiscal policy is a key factor in terms of supporting productive investment and encouraging the creation of employment opportunities and the production of wealth.

These meetings planned, May 3rd and 4th aim to develop a draft framework law outlining the principles and establishing a five-year reform program with a global view including the various tax types, both at the level of State, local authorities and parafiscal taxes, he went on to say.

For this purpose, a scientific committee was created and 14 thematic focus groups have been activated, while a call for contributions enabled to receive 167 written contributions from constitutional bodies, government sectors, political parties and unions, in addition to 120 proposals that were collected, said the Minister, noting that despite the differences in the proposals, all recommendations share the same problems connected to the diagnosis.

He pointed out that these meetings will enable to set up a comprehensive and integrated tax policy reform framework, stresseing that the ideas brought forward focus on the development of a national tax charter.

The Minister referred to a series of indicators, noting that 80% of the (VAT) is paid only by 1.6% of taxpayers.

Furthermore, he pointed out that 80% of corporate tax is paid by 0.8% of taxpayers and that only 46% of companies submitted their corporate tax return, whereas only 33% of these companies recorded gains. This reflects low tax compliance and creates a number of challenges, including equity and inequity issue, the lack of fiscal neutrality especially with regard to VAT, the lack of effectiveness regarding tax incentives that require an assessment of their impacts, particularly in relation to tax evasion or avoidance, the system of governance concerning the differences between the systems and the complexity of the procedures relating to tax disputes.