Tax loopholes: a cost of 32.14 billion MAD
Tax loopholes cost the Treasury 32.14 billion Dirhams (USD 3.21 billion). This is 13% less than in 2023, when they amounted to 36.95 billion Dirhams (USD 3.69 billion). These tax expenditures, which are equivalent to almost 2.1% of GDP (compared with 2.5% in 2023), have mostly existed since well before 2019. Their purpose is to favor certain expenditures and encourage specific investments, through tax exemptions and reductions.
In 2024, households benefited from 49.3% of tax expenditure, while businesses held 44.5%. The decrease in tax expenditure this year is mainly attributable to a reduction in VAT-related niches, which fell by more than MAD 6 billion (USD 600 million). This reduction is the result of tax reforms aimed at rationalizing existing exemptions. The VAT reform, implemented by the Finance Bill 2024, led to the abolition of 24 tax measures. This resulted in a reduction of MAD 5.2 billion (USD 520 million) in tax expenditure associated with this tax, down 28.3% on the previous year.
On the other hand, expenditure on corporate income tax and income tax increased by MAD 706 million (USD 70 million) and MAD 472 million (USD 47 million) respectively. This increase is explained by the maintenance of tax incentives in strategic sectors deemed a priority to support economic recovery, as well as by adjustments designed to preserve household purchasing power.
The reform of the corporate income tax, introduced by the 2023 Finance Bill, aimed to harmonize tax rates by reducing certain exemptions. However, incentives were maintained or introduced to support strategic economic sectors, contributing to an increase in tax expenditure. These measures include tax exemptions and reductions for sectors such as real estate. In addition, the exemption for mutual funds (undertakings for collective investment in transferable securities, UCITS), provided for under Article 6 (I-A-16°) of the General Tax Code (CGI), cost the Government MAD 1.2 billion (USD 120 million).
With regard to income tax, the increase of 472 million dirhams (USD 47 million) is attributed to measures to support households, notably in the form of tax allowances or exemptions for income from pensions, property income, or deductions for professional expenses. These measures are designed to support household purchasing power, particularly in times of rising living costs…
Khadija MASMOUDI
