Many of you who want to start a business in Morocco, may ask this question.
How much does a new employee cost me ?
If you are offering only the minimum wage as a net salary (2 398 MAD) , the cost will be (2398+ 542.23) MAD. No taxes applied just the social contribution which is 542.23 MAD in this case.. But things get difficult when you are offering different amounts of salary plus other benefits.
To understand well Moroccan payroll , let’s take the example of a new recruit in your company who wants a net salary of 15,000 MAD per month without any other extra benefits (CIMR1, bonuses etc ….).
To reach the net 15,000 MAD , the employer must do some math and start with a gross salary X and apply to it , the employer and employee social security contributions(CNSS2) and general income taxes (IGR3).
Normally, taxes and social contributions are paid by both the employee and the employer, but since our new recruit requires a net salary, we must play with a gross salary to get to the required net income.
The table below shows in detail, the social security contribution rate applied in Morocco since early 2016:
|Item||Employer’s contribution rate||Employee’s contribution rate||Max.||Total|
|Sickness and maternity, death||0,67 %||0,33 %||6.000||1,00 %|
|Pension||7,93 %||3,96 %||6.000||11,89 %|
|Compensation for loss of employment||0,38 %||0,19 %||6.000||0,57 %|
|Compulsory health insurance||2,26 %||2,26 %||None||4,52 %|
|AMO4 – Participation||1,50 %||–||None||1,50 %|
|Family benefits||6,40 %||None||6,40 %|
|Professional training||1,60 %||None||1,60 %|
|Total||20,74 %||6,48 %||27,48 %|
- Rate as of January 2016
The overall rate of social security contributions in Morocco amount to 27.48%. The employer’s share is 20.74%, the employee share is 6.48%.
The general income tax (IGR) is calculated using ranges of incomes to which is applied a rate and a deduction. See table below.
|Monthly income per month||Rate||Déductions|
|0,00 – 2.500,00||0 %||0,00|
|2.501,00 – 4.166,67||10%||250,00|
|4.166,68 – 5.000,00||20%||666,67|
|5.000,01 – 6.666,67||30%||1.166,67|
|6.666,68 – 1.5000,00||34%||1.166,67|
Our friend who wants net 15,000 Mad, will be in the 38% range because his taxable amount is 16,882 which is over 15000 per month
To reach a net salary of 15,000 MAD, We must consider a gross salary of 20,106 MAD per month.
|Item||Amount in MAD|
|Income Tax IGR||4.383,00|
|Total employers’ contribution||2.973,64|
Net salary = Gross salary – Total (AMO+CNSS) – IGR . According to our example:
20106 – 723 – 4383.00 = 15000 MAD
So we get to the answer to our “million dollar question”:
Our friend who wants the net wage of 15000 MAD will cost us 23079 in total (the gross salary + employer’s charges ( 20106 + 2973 = 23079 MAD) )
In summary, to offer 15,000 net to an employee , your company will have to spend 23079 MAD The extra is 8079 MAD representing 54% of net wages.
Note that there are other expenses paid by the company and which are not included in the payroll. Namely, insurance (mandatory since November 2002), staff transportation , catering, internal health service, and other .. .
CIMR: Caisse interprofessionnelle marocaine de retraite.(Moroccan interprofessional pension fund)
CNSS: Caisse nationale de sécurité sociale (National Social Security Fund)
IGR: Impôt général sur les revenus(General income tax )
AMO: Assurance maladie obligatoire (Compulsory health insurance)