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Moroccan Parliament Backs Austerity Budget

by Lorys Charalambous,, Cyprus

21 November 2013

Morocco's Chamber of Representatives has adopted the revenue part of the Government's 2014 finance bill (PLF 2014), designed to redress the public finances using the fiscal lever to raise taxes and to abolish existing tax breaks.

The first part of the bill was waved through during a plenary session, by 110 votes to 37. While welcomed by the majority of lawmakers, opposition groups vented their frustration and disappointment at draft legislation dominated by austerity measures.

According to the Moroccan Government, the PLF 2014 is intended to accelerate the pace of structural reforms, to boost growth by supporting investment and businesses, to consolidate social mechanisms, to ensure the sustainability of the public finances, and to tightly control the budget deficit.

The draft legislation provides for a "progressive taxation" of the agricultural sector in 2014, a measure expected to impact heavily on farmers in Morocco. Furthermore, the PLF 2014 provides for a reform of the value-added tax (VAT) system, to widen the base of the tax, thereby generating additional revenue. The bill establishes a two-tier VAT regime, with 10 and 20 percent rates. As a result, VAT rates on a number of goods and services will rise.

Exemptions for agricultural materials and fishing equipment are to be revoked from 2014, and will instead be subject to rates of 10 and 20 percent, respectively. In addition, the 10 percent rate will be levied on catering services provided by companies to their employees; while the 20 percent rate will be introduced on salt, milled rice, utility vehicles, edible fats and margarine.

Morocco's PLF 2014 aims to achieve economic growth of 4.2 percent, and targets a budget deficit of 4.9 percent of gross domestic product.

TAGS: Morocco | VAT rates | tax | investment | business | value added tax (VAT) | law | budget | corporation tax | food | legislation | tax rates | tax breaks | tax reform | Other

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