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.
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.