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Advance pricing agreements

Availability and eligibility

Are advance pricing agreements with the tax authorities in your jurisdiction possible? If so, what form do they typically take (eg, unilateral, bilateral or multilateral) and what enterprises and transactions can they cover?

Article 6 of Finance Act 100-14 for 2015 introduced two new articles (Article 234bis and 234ter) to the Moroccan General Tax Code. These provide the option to conclude an advance pricing agreement with the tax authorities for up to four financial years. The agreement concerns the pricing method of the transactions referred to in Article 214(III) of the General Tax Code.

Decree 2-16-571 published in the Official Gazette in August 2017 provides detailed rules for the implementation of the advance pricing agreement procedure.

Rules and procedures

What rules and procedures apply to advance pricing agreements?

Before submitting an application, the company may hold a preliminary meeting with the tax authorities to examine the conditions under which an agreement may be concluded – in particular:

  • the type and nature of the information necessary for the analysis of the pricing policy;
  • the schedule of meetings; and
  • questions regarding the arrangements for concluding the agreement.

The application must be submitted at least six months before the opening of the first financial year covered in the application.

The application should specify:

  • the companies associated with the applicant company;
  • the operations subject to the agreement;
  • the period covered by the preliminary agreement; and
  • the proposed transfer pricing methodology and its underlying assumptions. 

The application must be accompanied by documents that will allow the tax authorities to examine the request, in particular:

  • the general framework of the activities of the associated companies:
    • the organisational structure of all associated companies and their legal relationships, as well as the distribution of the capital of these enterprises;
    • the company’s business plan;
    • the financial and tax documents of the associated companies certified by the competent authorities and covering the last four financial years; and
    • the accounting standards applied by the associated companies that have a direct impact on the proposed transfer pricing method;
  • the activities of the associated companies;
  • the general description of the functions exercised, the assets used and the risks assumed by the associated companies;
  • the detailed description of the intangible assets held by the associated companies;
  • the description of the economic market and the scope of the activity of the associated companies and of all controlled transactions;
  • the contractual arrangements between the associated companies;
  • the cost-sharing agreements between the associated companies;  
  • the preliminary transfer pricing agreements entered into by the applicant with other foreign authorities and the tax consultations established by those foreign entities;
  • the identification, analysis and selection of comparables and the justification of possible adjustments of the comparability; and
  • the proposed transfer pricing methods and its detailed hypothesis as well as its adjustment conditions.

The company may support its request with any additional information or documents that it considers relevant.

The tax authorities may also request the applicant company to provide additional information on these documents in order to enable them to analyse the case.

In the parties concerned validate the terms of the agreement, the agreement must specify: 

  • the period covered by the agreement and the date of its entry into force;
  • the precise description of the operations covered by the agreement;
  • the description of the method used to determine the transfer price;
  • the arrangements for monitoring the agreement and the information to be provided in the follow-up report (see below);
  • the basic assumptions for the determination of the transfer price; and
  • the cases of revision and of cancellation of the agreement. 

The follow-up report must be filed annually at the head office of the tax administration and must include:

  • a detailed statement of the calculation of the transfer prices provided for in the agreement;
  • a summary statement of any changes made to the conditions of exercise relating to the transactions covered by the agreement;
  • a copy of the organisational structure of the associated companies and their legal relationships, as well as the capital allocation of such enterprises; and
  • a copy of the annual activity report of the associated companies.


How long does it typically take to conclude an advance pricing agreement?

As the procedure for the unilateral advance pricing agreement is relatively new, there is no available feedback at the moment. However, based on experience the Moroccan tax administration is unlikely to deliver such an agreement for several months.

What is the typical duration of an advance pricing agreement?

An advance pricing agreement is applicable for up to four years.


What fees apply to requests for advance pricing agreements?

No fee applies.

Special considerations

Are there any special considerations or issues specific to your jurisdiction that parties should bear in mind when seeking to conclude an advance pricing agreement (including any particular advantages and disadvantages)?

An advance pricing agreement concluded between a taxpayer and the local tax authorities is unilateral. In other words, there is no guarantee that the tax administration governing the non-Moroccan company will follow the position adopted by the Moroccan advance pricing agreement. Therefore, the risk of raising the tax base is not eliminated at group level.

Finally, in return for  the legal certainty conferred by the advance pricing agreement, the taxpayer commits to total transparency – which may be dangerous. Indeed, in most cases the applicant for an advance pricing agreement will aim to regulate an existing situation.

Consequently, in the event of a disagreement over interpretation leading to the failure of negotiations, it is possible that the tax administration will initiate a tax audit in order to adjust the applicant’s tax result and apply penalties for bad faith. 

Thus, the transfer pricing policy should be carefully documented.

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