Morocco Passes Income Tax Reform, Expanding Exemptions and Reducing Rates

Concretely, this reform, with a total cost of 5.2 billion dirhams, provides in particular for an exemption from IR for salaries below 6,000 dirhams per month. The first exemption bracket will thus increase from 30,000 to 40,000 dirhams per year. The objective: to increase the proportion of people exempt from IR from 71.4% to 80%.

In addition to this boost, the tax rates for the other brackets will be gradually reduced, with reductions of up to 50% in some cases. The marginal tax rate, for its part, will drop from 38% to 37%, thus easing the tax burden on high incomes.

Despite these measures, voices are being raised to denounce a "timid" reform in the face of soaring prices. "For a net monthly salary of 9,989 dirhams, the impact of the reform should represent an increase of 435 dirhams on the payslip. For a salary of 21,155 dirhams, the monthly gain will reach 546 dirhams. These amounts, although interesting, remain modest in view of the increases in the cost of living," notes L’Economiste.

Another key measure of this reform: the increase in the tax deduction for family expenses. This will increase from 360 to 500 dirhams per dependent person, with an annual ceiling increased from 2,160 dirhams to 3,000 dirhams (for a maximum of six dependent persons). A welcome aid for large families, which could however prove insufficient to cope with the growing expenses related to education, health and transportation.

While this reform lightens the tax burden for a portion of taxpayers, it only partially addresses the economic difficulties encountered by many Moroccans, regrets the newspaper.