Increase in TVA

[Don Quijote]

Yes, one must pay VAT on the interest of the Moroccan mortgage monthly quotes. Currently this insterest is subject to 10% VAT.

As for the increase of the VAT, I fully agree I may seem like a measure willing to "milk investors". I was recently given an explanation by Garrigues Abogados saying that developers were supporting 20% VAT on construction materials, but only collecting 14% when selling a property. Therefore the government decided to pair up the %, upsetting everyone. In most cases the contracts reflect VAT included, so the developers must swallow the bitter pill. However it is not always as clear and some investors are now discussing who should pay for the extra taxes.

Another thing I find unbelievable is the fact that one pays Land Registy fees and Stam duty (Registrament and Conservation Fonciere) on the full price WITH TAXES,. Therefore, one pays 3% plus 1% on the price plus the extra 20% VAT, thus paying an extra 0.6% and 0.2% fees....Something unheard of, and yet people seem not to complaint.

[camel with three humps]

Don Quijote:
You have raised some interesting point. I would like to expand on it.
" Garrigues Abogados saying that developers were supporting 20% VAT on construction materials, but only collecting 14% when selling a property."

On a simplistic scenario this means that the developers are claiming the 6% every time they do their VAT return from the authorities. Generally speaking the component of a finished product would be land 33.33%, construction cost 33.33% and profit 33.33%. So the 20% on 33.33% claimed on materials leaves plenty of beef.

It is fundamental of taxation that taxes should not be charged on Taxes whether they are direct or indirect Taxes.

In a Country where people are not financially astute or are to afraid to ask due to authorities heavy handedness or dare I say that a very large number of people are not affected on a day to day basis. The foreigners are treated as rich pickings and are milked for it. A policy that has been applied in other developing Countries. People wise up to it and this later affects the Country.

In the case of Morocco it does not matter as all this will go into the Kings and his families pockets.

I personally do not have a problem with, in the manner a country sets out its fiscal and other laws. I object to lack of transparency and being treated differently from the locals.

[just-alex]

HI, i READ SOMEWHERE THAT IN mOROCCAN LAW ALL FIXED CHARGES AND FEES WHICH CANNOT BE AVOIDED SHOULD BE INCLUDED BY LAW IN THE PRICE.........

[camel with three humps]

Just Alex:
Can you be more precise. What fixed charges ? What fees ? what do you mean by, cannot be avoided ? should be included in the price, Price of what ???

[just-alex]

will have to go back to my suitcase full of legal stuff in storage but I remember reading the new off plan purchasing law I think, which states lots of things like no payments before the foundations are in, purchasers reponsibility to chase communication, and unavoidable charges to be included in price such as I assume, anything which is payable as a tax to the developer or the governemnt This would also apply under the 'UK code of Marketing' for any prices quoted in this country when the property was reserved.
sorry can't be more precise without research again.......perhaps you could remind me what the add ons are ? I remember a total of about 5.5% being discussed which included some taxes I think......???

[The Soup Dragon]

Tax of mortgage interest rates is something that I don’t think any of us considered when taking the plunge with investing in Morocco. (I certainly didn’t.) However, with hindsight I can see that it is a possibility that may have been on the Government’s radar for some time. After all, most people buying in Morocco are looking to finance purchase with a Moroccan mortgage – so they know they can get away with it.

VAT has been increased to 20%. Most developers are absorbing the hike as their contracts with us say that price includes VAT. It’s that simple. I don’t want to knock any developers that may have tried to change the Government’s decision and sighted how they have to pay 20% VAT for materials and yet purchase prices doesn’t reflect the increased VAT. It’s only natural that they want to protect their profits.

[just-alex]

Yes, some developers were ok about this , but others used it as a stick to beat their clients into signing for completion before the site was properly habitable or property finished to the publicised level of quality........its quite simple really.....if contracts are inclusive of TVA , after the initial panic and research, one should have decided to resist the stressful pressure.....after all some properties were actually constructed a long time ago . Its the Developer who has been playing catch up with the rest of the infrastructure etc.....and it is that delay which has landed some people with the stress of being pressured to sign before the increase. That is therefore not the fault of the client and the developers should not have attempted to pass it on other than to new clients ..Yet,even if the contract did not state that the price was inclusive of TVA I think it could be challenged. Pricing should be clear and transparent. As far as the other small 'non optional' extra% go I believe they are supposed to be written into the contract too, not added on after.....it should only be notaires fees that are extra..............

[camel with three humps]

"Yet,even if the contract did not state that the price was inclusive of TVA I think it could be challenged."

HOW ARE YOU GOING TO CHALLANGE ?? AND WITH WHOM. THE CONTRACTS ARE PRIVATE. THE DEVELOPERS WILL NOT RESPOND OR GET INTO ANY COMMUNICATIONS AND YOUR AGENT WILL PLAY YOU AGAINST THE DEVELOPER. REMEMBER ONCE YOU HAVE BOUGHT THE AGENT WANTS TO KEEP THE DEVELOPER SWEAT.

THE DEVELOPERS, A LARGE MAJORITY OF THEM ARE SPANISH OR HAVE SET UP A MOROCCAN COMPANY, ARE WELL EXPERIENCED IN EVADING ISSUES AND GIVING THE BUYERS A MERRY GO ROUND. THEY THE DEVEOPERS, HAVE LEFT A STRING OF DISASTERS ON THE COSTAS AFFECTING MANY PEOPLES LIVES AND LIFE TIME SAVINGS IN JEOPARDY.

"Pricing should be clear and transparent"

NOT IN MOROCCO, AND WITH THE DEVELOPERS THAT ARE PLAYING THE FEILD.

[just-alex]

Camel x3 ....Have sent you a PM...but briefly there are laws in Morocco but they are being ignored by 'developers'......Moroccan barristers are not happy about what is happening in their country and are pleased to take a case using these laws..........actually the Moroccan system is probably more sympathetic than the UK system where off plan property is concerned................so lets have less talk and more action please!!!!

[camel with three humps]

Morocco has taken over the French system. In my experience the French system offer the greatest protection to a buyer. Sadly like in all third world Country the legal system does not work ( Spain is a good example ) Lawyers have been threatened with their life & their family.

A lawyer/Judge can be bought in this instance and you can see the law is flouted openly and do you think the people in the know and the ones that matter are not aware of the position. They have been bought out.

For reasons above and the time it take to win your case and than if the developer appeals could be 15 years and by that time the developer has wounded up and you will list an unsecured creditor. I know that a land dispute case in India took 36 years to come to its conclusion, the petitioner had died and his children carried the case through.