Morocco’s Cement Tax Hike: Building Costs Set to Rise in 2025
Starting January 1st, 2025, get ready to dig a little deeper for your construction projects in Morocco. The Moroccan government is set to implement a new tax on cement as part of the 2025 Finance Bill, impacting both locally produced and imported cement. This move, designed to bolster government revenue, will likely ripple through the construction industry and potentially affect housing affordability.
The new tax will be levied at a rate of 0.15 dirhams per kilogram of cement. This means that whether a construction company sources its cement domestically or internationally, the added cost will be passed down the line, ultimately impacting consumers.
How will the tax be implemented?
The government plans to apply the tax at two levels:
- Domestic Cement: Local cement producers will be responsible for calculating the tax on their sales and internal use of cement. They will be required to file tax returns electronically and make payments by the designated deadlines.
- Imported Cement: The tax on imported cement will be collected through existing customs procedures overseen by the Customs and Indirect Tax Administration.
This new tax structure is not entirely unprecedented. A special levy on cement was initially introduced in 2002 at a rate of 0.05 dirhams per kilogram. This levy was gradually increased to 0.10 dirhams and then 0.15 dirhams in subsequent years. The current move aims to streamline this tax by integrating it into the General Tax Code, simplifying its administration and enforcement.
What does this mean for the construction industry and beyond?
The cement tax hike is part of a broader fiscal reform agenda outlined in Framework Law No. 69-19. This law aims to streamline and simplify the rules for imposing and collecting parafiscal charges.
While the government’s objective is to create a more efficient tax system, the immediate impact of the cement tax will likely be felt by various stakeholders:
Construction Companies: Increased cement costs will likely squeeze profit margins, potentially leading to higher project bids and impacting the overall cost of construction.
Homebuyers: The increased cost of construction could translate to higher housing prices, potentially impacting affordability and access to housing, particularly for first-time buyers.
* The Economy: The construction industry plays a significant role in Morocco’s economy. Any slowdown in the sector due to increased costs could have broader economic implications.
It remains to be seen how the market will adjust to this new tax. However, one thing is certain: the cost of building in Morocco is about to get a little bit steeper.
