Tax expenditures in Morocco: A fiscal policy lever to be streamlined for greater efficiency of efficiency and social justice

Abstract

Tax expenditures represent a major instrument of fiscal policy in Morocco, allowing the State to voluntarily forgo revenue to achieve economic objectives (stimulating investment, creating jobs) and social objectives (supporting purchasing power, reducing inequality). Their share, which was around 2 to 3% of GDP in recent years, has been significantly reduced thanks to the reforms undertaken since Framework Law No. 69-19 on tax reform: from 36.96 billion dirhams in 2023 to 31.5 billion in 2024 (-13%), then a slight stabilization around 32 billion in 2025. Despite these advances, tax expenditures still suffer from several limitations: a lack of rigorous governance, insufficient systematic impact assessments, the absence of prior impact studies, and often unfavourable redistributive effects (primarily benefiting large corporations and wealthy individuals). Tax revenues, which have increased significantly (+15.2% at the end of October 2025, reaching 280.8 billion dirhams), benefit from a broader tax base and improved compliance, which partially offsets the reduction in tax loopholes. The ongoing streamlining, eliminating outdated measures, converging corporate tax rates, and increasing the targeting of incentives presents an opportunity to strengthen tax fairness and free up additional budgetary resources. However, for tax expenditures to become a genuine driver of sustainable development, it is essential to establish an independent monitoring and evaluation mechanism, mandate prior impact assessments, and better integrate social considerations into their design. Reformed in this way, they can fully reconcile economic efficiency, social justice, and the sustainability of Moroccan public finances.