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Documentation and reporting

Rules and procedures

What rules and procedures govern the preparation and filing of transfer pricing documentation (including submission deadlines or timeframes)?

There is no specific obligation to make transfer pricing documentation available to the Moroccan tax administration.

However, Article 214(III) of the General Tax Code covers the information that the Moroccan tax administration is entitled to require from the taxpayer in order to assess the compliance of transfer pricing with the arm’s-length principle (see below) and the short period that taxpayers have to provide such information (30 days). As a result, Moroccan companies engaged in intragroup transactions with associated companies located abroad should prepare such documentation in advance.

Content requirements

What content requirements apply to transfer pricing documentation? Are master-file/local-file and country-by-country reporting required?

Article 214(III) of the General Tax Code stipulates that the authority may request all documents and information relating to:

  • the nature of the relationship connecting the company taxable in Morocco and the company located abroad;
  • the nature of the services provided or the products sold;
  • the method by which the price of transactions between the companies has been determined, and the supporting documents; and
  • the regimes and tax rates applicable to businesses situated outside Morocco.

The requirements of Article 214(III) are therefore quite similar to the local filing requirements. However, these requirements are not as precise as those described in Action 13 of the BEPS Project.

In practice, documents presented to the tax authority must be written in one of the two languages admitted in Morocco: French or classical Arabic. The majority of documents relating to Moroccan taxation are written in French.


What are the penalties for non-compliance with documentation and reporting requirements?

In the event of breach of the provisions relating to the authority’s right to the documentation, a fine of DH2,000 (approximately €180) applies, as well as a late payment penalty of Dh100 (approximately €9) per day, up to a maximum of Dh1,000 (approximately €90).

Article 214(III) of the General Tax Code provides that in the absence of a response or in the event that the documentation is incomplete, a relationship of dependency is presumed to be established.

Thus, documentation which is incomplete or not submitted will not reverse the burden of proof in relation to the arm’s-length nature of the transaction, but will establish that the companies in question are dependent.

When the relationship of dependency is established in this way, the tax authority can invoke Article 213(II) of the General Tax Code, and thus adjust taxable profit by bringing in the profits it considers to have been indirectly transferred by means of increases or reductions in purchase prices or sales prices (or by any other means).

In such case, the remuneration and costs paid by the Moroccan entity will be subject to general corporation tax at one of the progressive rates, up to 31%.

The following penalties and late payment interest may be added to that tax:

  • an increase of 15% for failure to file or late filing of returns; and
  • a penalty of 10% and an increase of 5% for the first month of delay, followed by 0.5% for every further month or part thereof.

Best practices

What best practices should be considered when compiling and maintaining transfer pricing documentation (eg, in terms of risk assessment and audits)?

Preparing transfer pricing documentation in advance:

  • allows the taxpayer to work upstream on its transfer pricing policy; and
  • indicates to the Moroccan tax authorities that transfer pricing is a well-known issue within the group, which may limit the tax risk.

Moreover, it allows the taxpayers to avoid the 30-day deadline, which is a short timeframe if the documentation has not already been prepared. It also ensures that the Moroccan tax administration will not apply penalties and late payment interest.

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