Taxation and Property Development in Morocco

Taxation reflects a country's socio-economic and political realities, but appropriately designed tax laws can also act upon these realities. Depending on its assigned qualitative and quantitative role, taxation can contribute to growth or recession in a sector of the national economy. Until the 1978 Finance Law, the real estate sector was primarily subject to a static tax—the urban tax—with mainly financial objectives. The 1978 Finance Law established a genuine real estate tax system through profound reform of the urban tax and creation of two new taxes: a tax on real estate capital gains and a tax on urban land (including a single tax due upon land inclusion within urban perimeters and an annual tax on unbuilt land). This dynamic taxation emerged from unprecedented real estate transaction development generating considerable profits.