Karim Hemras
01 December 2019
Casablanca Finance City (CFC) no longer needs an introduction. You are probably aware that it is Africa's leading financial center. But what else do we know about this African economic and financial hub at the crossroads of continents?
Before answering this question, a little geography seems necessary, in addition to geopolitics. Morocco is located in the north of the African continent, a natural crossroads between Africa and Europe. Due to its position, the kingdom has considerable substantial assets enabling it to be the natural gateway to the rest of the continent.
Located only 14 km from Europe, Morocco, also at the confluence of the Atlantic Ocean and the Mediterranean, gives direct access to a market of more than a billion consumers. The kingdom's arguments are quite strong. Indeed, the country has the second-best infrastructure in Africa, according to the 2019 report of the World Economic Forum, which promotes cooperation between the private and public sectors. Ranked 16th in the world and first in Africa in terms of maritime connectivity, Morocco, with its 16 airports, is proud to be the leading Europe-Africa hub thanks in particular to its 33 direct flights to the rest of the continent from Casablanca airport for a total of 29 countries.
In addition to these advantageous positions, Casablanca is only 5h30min from Moscow, 6H30min from New York, 7H from Dubai, 8h from Montreal, and 9h from São Paulo. All these geographical elements, coupled with Morocco's political stability as well as the kingdom's economic performance means that today, CFC, located in the heart of Casablanca, can legitimately claim its place as a genuine business catalyst in Africa. And Casablanca Finance City can arm itself with solid arguments to convince.
Casablanca Finance City locates in the heart of the Casa Anfa area, the flagship area of the country's economic capital, in a brand new district offering a real estate offer to the best international standards, and a pleasant living environment extends over an area of 100 hectares, half of which is green spaces. The "City" offers a functional mix of offices, housing, shops, and facilities. The Anfa area, symbolized by the 122-meter Casablanca Finance City Tower - a concentration of elegance and technical and ecological performance - boasts a high-level security system and significant cultural, social, and sporting infrastructure. Highly prized by educational and health institutions, it is also an additional lung for the city because of its vast green spaces. Besides, the CFC district is connected to the rest of the capital by significant road links that supply residential areas, other Moroccan cities, and Casablanca airport located less than 25 minutes away. The "City" is also accessible via line 2 of the tramway.
Casablanca Finance City (CFC) also and above all means simplified administrative procedures, thanks in particular to the establishment of a one-stop-shop that guarantees work permits, residence permits, and the incorporation of companies under an accelerated process. Business visa application procedures are considerably simplified. Indeed, work permit issuance will not exceed a maximum of three working days. As for residence permits for foreign workers, the time limit is only two weeks. An important detail concerning employment contracts for foreign workers is that CFC members who already have significant advantages in the processing of application procedures can collect the requested documents directly from CFC headquarters. The legalization of these can also be done on-site.
These incentives also apply to procedures for applying for accreditation for financial institutions through the introduction of a consolidated form. In addition to all these incentives, there is free movement of people. At the CFC, the issue of recruiting foreign employees does not arise. Recruitment procedures for this category of workers are indeed streamlined for companies with CFC Status. This incentive is a definite advantage for the regional headquarters of multinationals with a staff of different nationalities.
We cannot talk about the fluidity of people without mentioning the free movement of capital.
CFC recognized early on the value of a flexible exchange rate regime. In this regard, CFC member companies have the option of opening a single foreign currency account for all their operations. Moreover, they have complete freedom to manage foreign currency assets from foreign sources. At the same time, CFC companies are benefiting from an extension of their travel allowance. Regarding the flow of capital, it should also noticed that the transfer abroad is made without any restriction on management and technical assistance costs. In the area of justice, CFC is also well off, with the establishment of the Casablanca International Mediation and Arbitration Centre (CIMAC). In addition to CIMAC, rooms dedicated to the ecosystem of the financial center have been made available to member companies.
For CFC member companies, there are attractive tax benefits. Thus, financial companies, professional service providers, and holding companies are exempt from corporation tax for the first five years of their establishment. Beyond five years, they are taxable at 8.75%. According to the terms of the 2020 FDP, the SI should increase to 15%, while maintaining a total exemption of 5 years, which makes it an attractive package.
Registration fees on acts of company creation and capital increase are exempt. Besides, there is an income tax, which is also very advantageous for employees of the same companies. They have the choice between an IR rate of 20% on crude oil for five years or a standard rate beyond that for the first option. For the second option, it is a single choice equivalent to the standard RI rate. The question at this level is who and how to obtain CFC status, which gives access to this attractive package and direct access to a large community of active members in 46 African countries.
To get this label, you must first prove that you have a regional vocation in Africa and go through three stages for the application procedures. First, it is necessary to contact the CFC business development team directly. A small aside, the commission, responsible for awarding the label in question, is composed of several members including a representative of the Central Bank (Bank Al-Maghrib), the chairman of Casablanca Finance City Authority, the Director of the Treasury, as well as the Minister of Economy and Finance himself.
After contacting the business development team of the commission mentioned above, a letter must then be submitted to CFC describing, in detail, the development project and business plan of the applicant company to confirm its willingness to become a member. Then, it will be necessary to prepare an application file for CFC status consisting of the CFC status application form, the accreditation status application form, and the business plan. The final step will be the review of the application by a CFC commission and final approval. All this within a maximum of 45 days. Once the application has been processed and validated, the beneficiary company must send an annual report each year as well as the payment of the yearly fees related to the CFC status.
Becoming a member of Casablanca Finance City means having access to a large community of active members in 48 countries on the African continent. The CFC status also entitles you to Doing Business facilities and an attractive package, particularly in terms of taxation. The members of Africa's leading financial center also have the advantage of operating in an ecosystem that is emerging as the next growth driver. If three out of four newborns will be African in 2100, 24 countries on the black continent will grow to a CAGR of at least 5% by 2030. With a working population of 1.1 billion people in 2035, the African continent will see its inhabitants' purchasing power increase considerably to reach $5,000 for 70% of households in 2025.
Do not hesitate to get in touch with us if you are interested in getting the CFC status, as our firm has gained a real expertise in supporting CFC-labelled companies.
Karim Hemras
is a CPA and tax advisor. He is the founder of WeCount.ma, the accountig firm that helps foreign companies with their accounting, payroll and tax compliance, so that they can grow confidently in Morocco and Africa.
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