In many countries, the New Year brings a number of legal changes, affecting the business operations. This is the case of Morocco, that has implemented a new obligation to prepare specific transfer pricing documentation, as established by the Moroccan Finance Law 2019, that will be effective from January 1st, 2020.
Scope of the new TP rules
All companies that have direct or indirect dependency links with foreign companies and perform intragroup transactions, will be required to have an updated report documenting them and the values applied.
No threshold has been implemented, so all transactions with related parties should be documented, regardless of their volume.
In case of a tax inspection or audit, the documentation should support the arm’s length valuation given on the transfer pricing applied in the products or services, or for the deduction of the intergroup expenses recognized by the company.
The rules provide so far very little guidance on the specific formats of the TP documentation and reports to be produced. However, to the extent that Morocco joined OECD’s BEPS framework, it is therefore likely that the content of the Moroccan transfer pricing documentation will be aligned with that of the documentation provided for in BEPS Action 13.
Morocco is also likely to implement the CbCR declaration.
Submission of the TP documentation
This documentation shall be submitted only in the event of a request by the competent authorities under a Tax Audit procedure.
Our recommendation is not to wait for the start of a tax audit or inspection to prepare such documentation. Gathering the information and preparing the documentation may be a complex, time-consuming exercise.
Moroccan legislation has imposed very limited deadlines (between 15 and 20 days) between the date of notification of the verification of the report and the actual commencement of the inspection. These deadlines leave a very tight working margin so we strongly advise to have the TP documentation prepared as soon as possible and then update it annually.
If you need more detailed information or that we help you with the preparation of this new obligation, please contact us and we will see the specific situation of your company.
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