Under Moroccan law, consolidation or group taxation is not allowed.
Morocco has a general provision within its tax legislation requiring transactions between related parties to be at arm’s length.
Where a Moroccan company is directly or indirectly connected with enterprises situated inside or outside Morocco, profits transferred indirectly to such enterprises, by means of increases or decreases in buying or selling prices or by any other means, must be included among taxable profits on the tax return.
In order to determine the amount to be included among taxable profits, Moroccan tax authorities will make comparisons with other similar companies carrying on normal business activities or by means of direct assessment based on information available to the tax authorities.
Country-by-country (CbC) reporting
The Finance Act of 2020 has introduced CbC reporting.
The relating information will be exchanged automatically, subject to reciprocity, with the tax authorities of countries that have concluded a convention or agreement to this effect.
The filing obligation of the CbC report applies to a company established in Morocco when it meets the following criteria:
- It directly or indirectly holds an interest in one or more companies or establishments located outside Morocco which requires from the Moroccan entity to prepare consolidated financial statements in accordance with applicable accounting standards or which would be required to do so if its interests were listed on the Moroccan stock exchange.
- Its consolidated annual turnover before tax is equal to or greater than MAD 8,122,500,000 for the financial year preceding the one concerned by the declaration.
- It is not owned directly or indirectly by any other company located in Morocco or outside Morocco.
The filing obligation might also apply in some other situations.
A penalty of MAD 500,000 applies for not filing the CbC report or for filing it out of the due date.
This provision becomes effective for fiscal years beginning on or after 1 January 2021.
No specific thin capitalisation rules exist in Morocco.
However, the tax law restricts the interest rate on debts issued by shareholders and the basis of calculating deductible interests.
Interest incurred is tax deductible if the shareholder’s capital is fully paid. Additionally, the sum of the shareholder loans generating deductible interests should not exceed the equity capital subscribed, and the applicable interest rate should not exceed the official rate calculated annually on the basis of six months treasury bills.
Controlled foreign companies (CFCs)
There are no provisions for CFCs in Morocco.