Rapid change in the Moroccan economy is placing huge pressure on local accountancy firms as they find their role and their way of working changing beyond recognition. Che Golden reports.

​​​​​​​The development of the economy and the changes in the global environment has resulted in a complete change in how Moroccan accounting firms do business. Firms are assuming additional responsibilities and accountability due to enhanced compliance requirements in rules and regulations imposed by government. However, with growing competition and complexities in the economic environment, Moroccan accounting firms are facing many challenges.

“Crucial challenges relating to profitability and workforce renewal remain major issues,” said Najat Moughil, partner at Exco ACDEN, a Kreston Global member form. “The evolution of client expectations, the rise of pricing pressures and the aging of the professional population introduce complex dynamics, requiring an agile adaptation of accounting firms.”

Beyond cyclical factors that will weigh on the performance and level of profitability of firms, the accounting profession must face a much more radical transformation of its framework of intervention, which should lead to a profound change in the business model of many firms under the effect of three major changes: the accelerated digitisation of accounting activities and the development of artificial intelligence, the ageing of the profession requiring a sustainable renewal of teams and their skills and, the strengthening of ecological and climate issues

“Facing these challenges, the accounting profession in Morocco is in the midst of thinking about its future with a new vision,” said Moughil. “The objective is to adapt the profession to the current situation, but also to broaden the field of opportunities by being at the forefront of the transformation of the economy.”

On of the biggest pressures on local firms is keeping up with the slew of new regulations that the government is implementing as it seeks to modernise and grow the economy through investment. Over the past 12 months, Morocco has implemented several regulations designed to modernise its tax system, improve the ease of doing business and to encourage SMEs in new sectors.

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The Finance Law 2023-2024 introduced major changes aimed at improving tax transparency and optimising state revenue. Among the most important reforms is the implementation of a new withholding tax regime for VAT. This new regime aims to better regulate transactions and ensure that taxes are correctly collected in a timely manner. The Law has imposed new tax obligations on foreign companies providing online services in Morocco, such as Netflix, Airbnb, and Booking.Com. These companies will be required to register on an electronic platform, obtain a tax identifier, submit monthly revenue declarations, and pay the corresponding tax without any possibility of tax deduction.

Law on Payment Terms came into effect on July 1, 2023, and by 2025, it will cover all merchants with a turnover of more than 2 million dirham including public establishments that regularly engage in commercial operations. This regulation aims to combat a significant issue in the Moroccan economy by establishing legal payment deadlines (minimum and maximum). A quarterly declaration of unpaid invoices within the deadlines must be made by the client, who must pay a fine of 3% on any late payments to the Treasury. The auditor (or accountant) must certify the state of the invoices thus declared, which serve as the basis for calculating the said fine.

A reform of the regulations applicable to state contracts has been implemented to specifically support SMEs, offering them better chances to participate in public procurement. This includes combating systematic discrimination against them and promoting healthy and fair competition

Additionally, significant modifications have been made to the corporate tax (IS) and value-added tax (VAT) rates. The IS rates have been revised to a single rate of 20% to align with current economic realities and encourage investment, while VAT rates have been adjusted to harmonize the tax system with international standards. These changes are also accompanied by new payment obligations, aimed at reducing the payment periods for invoices (60 days to 120 days in the case of an agreement) and improving the cash flow of businesses.

“The fiscal and regulatory reforms have had a direct impact on the demand for accounting and financial management services,” said Jaouad Khayatey, managing partner of Fiduciaire Internationale, a PrimeGlobal member firm. “With the introduction of new withholding tax rules and changes in VAT rates, companies have had to adapt their management systems and ensure strict compliance with the new requirements. This has led to a significant increase in demand for the services of accountants, chartered accountants, and tax advisors.”

Accountants have seen their workload increase due to the need to prepare detailed invoices and manage payment delays. They must also ensure strict compliance with the new VAT withholding reporting obligations, which requires increased technical expertise and continuous vigilance. This increased demand reflects companies’ awareness of the importance of tax compliance, according to Khayatey.

“The next 12 months are expected to continue to be marked by significant developments, both in terms of regulations and the demand for financial and accounting services,” he said. “One of the major ongoing initiatives is the electronic invoicing project, for which Morocco has recently launched a call for tenders for design. The introduction of electronic invoicing aims to modernise the tax system, reduce fraud, and improve the efficiency of business transactions.”

The impact of such a system is potentially huge. On one hand, it could simplify invoicing and tax reporting processes, reducing the administrative burden on businesses. On the other hand, transitioning to this new system will require significant adaptation of companies’ accounting practices and IT systems, which could initially increase the demand for change management consulting and training services.

“Morocco’s fiscal and regulatory landscape is undergoing significant transformation, with reforms aimed at enhancing the transparency and efficiency of the tax system,” said Khayatey. “These changes are driving demand for specialised accounting and financial management services, and this trend is expected to continue in the coming months, particularly with the introduction of electronic invoicing. However, in the long term, the modernisation of systems could stabilise this demand by automating many currently manual processes.”

But while accountants are braced for a huge uptick in workload, fee pressure is still a problem. “Fees for non-audit services are not regulated in Morocco,” said Mohamed Boumesmar, partner at Audicis, an MGI Worldwide member firm. “Audit services are governed by a standard issued by the Order of Chartered Accountants, which has been revised by the Competition Council to no longer interfere with the setting of hourly rates. Audits remain exclusively available to members of the Order of Chartered Accountants. However, non- audit services remain unregulated and open to greater competition. Competition, especially for high-value clients, remains intense, notably among large firms and between these firms and medium or small-sized firms.”

However, with the high rate of new companies being formed at the moment, Mehdi Benouna, partner at Ecovis Morocco, is confident that fees will only go up.

“Morocco is an economy in constant progress with 93517 incorporations of companies during 2023,” he said. “The accounting market is getting bigger each year, offering a lot of opportunities in terms of customers and level of fees. Even if there is increased competition, the level of fees keeps rising. On the other hand, the recruitment and retention of talents begin to be more difficult because of competition.”

As the government continues to drive the economy through investment, Boumesmar is keeping an eye on certain sectors over the coming 12 months. “The healthcare industry will create a lot of demand, with an increase in the national health budget of nearly 10% and measures to universalise mandatory medical coverage implemented by Morocco,” he said. “Similarly, the automotive and aeronautics sectors are also experiencing continuous development, to the point where Morocco is now a well-known regional hub in these industries. Finally, the sector of companies related to information technology and digital innovation continues to develop both in the Moroccan market and in the African or MENA markets.”

He also pointed out that World Cup preparation, which will be organised by Spain, Morocco, and Portugal, the Moroccan economy will experience significant infrastructure and activity development across various sectors.

The automative sector in particular, is going to generate huge demand for professional services, according to Chakib Zaari, founder of Baker Tilly Majer. “Morocco has emerged as a key player in this sector, attracting substantial international investments,” he said. Significant partnerships with major global firms in the car battery industry, involving investments worth billions of dollars, are set to roll out over the coming years. These developments are expected to have a cascading effect on the demand for accounting, tax, legal, and advisory services, mirroring the impact of past large-scale investments.”

While traditional Moroccan accounting firms have been SMEs, bigger firms are moving into the market.  “The significant growth over the last 12 months can be noticed in the BPO (Business Process Outsourcing) for the accounting and audit,” said Benouna. “The Big Four or medium accounting firms have opened local offices or linked partnerships with local firms to perform bookkeeping, payroll, review of accounts and audit tasks.”

Mergers and acquisition activity amongst the larger firms is also having a positive knock-on effect for the smaller local firms. “A pivotal change occurred when the firm previously representing KPMG in Morocco underwent a transition, opting to merge with BDO,” said Zaari. “This merger significantly boosted BDO’s standing within the market. In response, KPMG International appointed a new representative firm in Morocco, injecting fresh momentum into their operations. This strategic shift has introduced a new dynamic to the industry, characterised by active staff movement and client realignment, setting the stage for renewed growth and competition.”

Although these significant changes have primarily involved major firms, there have been moderate mergers among smaller firms as well. These mergers indicate a trend towards consolidation, according to Kaari, though not on the same scale as the major players.

While it is no doubt exciting having so much change and growth in so many sectors of the Moroccan economy, Benouna thinks that the most significant development is the fact that chartered accountants will have a bigger role of trusted third party towards Tax Authorities, giving them more responsibilities regarding the certification of tax returns of the taxpayers.

It all adds up to a lot of change in a short period of time and change can be difficult. To help firms deal with this brave new world, the Moroccan Council of Chartered Accountants, which represents the profession within the IFAC, has commissioned an external firm to conduct a strategic positioning study. This study aims to help modernise its structural and operational framework, adequately train chartered accountants  and respond to market opportunities over the next 20 years.

The National Accounting Council, which issues accounting standards in Morocco, is currently reforming the Moroccan accounting framework for both individual and consolidated accounts. The goal is to achieve greater modernisation and adapt to the evolving needs of stakeholders. These projects are expected to be completed by the end of 2024.