Understanding Payroll in Morocco: What Global Companies Need to Know About Morocco Payroll
Dec 4, 2016
With a growing urban population that was just over 60 percent of the total population of the country in 2015, Morocco is a country that is set for consumer growth. With 11.73 million people in its well-educated labor force, Morocco is also a country rising in productivity, although the $1.48/hr (£1,20; €1,38) minimum wage leaves much to be desired in terms of quality of life.
In recent years, Morocco has become a major player in African economic affairs and is the 5th largest African economy by GDP. Though the corporate income tax rate of 30 percent is relatively high, businesses expanding to Morocco benefit from the country’s straightforward (and business-friendly) regulatory environment, its high potential as an emerging market, and its fairly simple payroll guidelines and expectations. Read on for a primer on incorporating Morocco into your business and global payroll operations.
Generally, Morocco does not impose any restrictions on foreigners wishing to invest in the country. There are three types of business forms available to foreign companies in Morocco – corporation, branch office, and liaison office – each with different registration requirements and minimum capital requirements. To incorporate, organizations will need to file documents with CRI to register with the Ministry of Finance for patent tax, with the Tribunal of Commerce, and for social security and taxation.
Following business set-up, organizations should engage local payroll administration, remote payroll operations, or a global payroll provider with holistic operations and experience in-country. Companies that register in Morocco are responsible for complying with all Moroccan regulations as the Employer of Record. Bank accounts within the country are not required, but are advisable.
Payroll setup within Morocco is fairly straightforward, as the country is used to conducting international business. Enterprise level companies may experience a slightly longer setup only because of the transfer of records of people employed in the home and host country (Morocco) simultaneously.
Employment Laws/Employee Rights
Morocco boasts a robust framework of laws protecting the rights of laborers. Moroccan employees enjoy freedom of association, collective bargaining rights, freedom from compulsory labor, an acceptable work conditions structure and freedom from child labor. Companies doing business in Morocco are held to these standards under the constitution of the country. Around 600,000 workers in Morocco are unionized, which translates to just under 6 percent of the population of the country.
Although the Moroccan Labor Union is officially non-partisan, its bargaining power as the largest labor union and close affiliation with the monarchy in the country gives it a large amount of leverage over any business that is looking to involve itself with Moroccan commerce. Union officials must be of Moroccan nationality.
Morocco has an extremely robust right to strike, with new Labor Code laws prohibiting employers from hiring substitute workers or discriminating against employees who strike. Moroccan Penal Code penalties also impose harsh sanctions, some criminal, against any person using force to stop a coordinated strike. These strong policies have been known to cause problems for foreign employers.
Compensation, Bonuses, Severance
The country upholds a minimum wage of $1.48/hour (£1,20, €1,38) as of 2016. This and other pertinent issues are overwhelmingly decided through collective labor agreements. For instance, penalties are set by Labor Code law for employers who fail to recognize and pay overtime compensation, which is currently 100 percent of an employee wage on paid holidays, between 50 percent and 100 percent on a rest day, and 25 percent above the wage for any extra hours worked between 6 am and 9 pm. Employers may extend a workday to 12 hours, without overtime pay, only if it is impossible for workers to complete the day's work by an act of God or other large scale emergency.
Certain industries, such as the garment industry, have built a culture of employee bonuses into the framework of the system. Other regulations affecting payroll include the reduction of the non-agricultural workweek from 48 to 44 hours, with employees guaranteed a full rest day per week. Violations by an employer may result in a fine up to 20,000 dirhams.
Standard tax withholding on any dividends earned by non-residents in Morocco is 15 percent unless there is a special treaty in place reducing that amount. This does not apply to any Moroccan companies that are subject to Moroccan CIT. A 15 percent branch tax applies to net income that is transferred out of the country to any foreign entity, and this may also be reduced by a tax treaty. Any payment to a non-resident service provider will receive tax withholding at the rate of 10 percent.
Income tax rates in Morocco exist on a sliding scale from 0-38 percent depending on individual income. Employers and employees are required to contribute to Social Security. Employers are required to contribute for family benefits (6.4%); death/illness/pregnancy (8.6%), a professional training tax (1.6%), and mandatory health insurance (3.5%). Employees contribute death/illness/pregnancy (4.29%) and health insurance (2.0%).
|Date||Morocco's Public Holiday Schedule|
|January 1st||New Years Day|
|January 11th||Proclamation of Independence|
|May 1st||Labor Day|
|Shawwal 1||Eid Sghir/End of Ramadan|
|August 14th||Allegiance Day|
|August 20th||Revolution Day|
|Dhu al-Hijjah 10||Eid Kbir|
|Muharram 1||Muslim New Year|
|November 6th||Green March|
|November 18th||Independence Day|
|Rabi' al-awwal 12||Eid Al Mawled|
A Global Payroll Solution
Although Morocco is a country that is ripe for commerce, the political affiliations and complexity of treaties may require an experienced hand to navigate. As for paying Moroccan employees, working with a global payroll solutions provider with experience in Morocco is the easiest way to navigate payroll administration for many of the world's top companies.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.