Tax audit refers to all the procedures established by the Moroccan tax administration which aim to verify the accounting regularity and compliance of a company in order to ensure the veracity of the tax declarations prepared by the company. Moroccan legislation has assigned responsibility for these controls to the tax administration for all Moroccan companies (legal or natural persons).
Tax audit procedures are divided into two types:
On-site tax audit
Documentary tax audit
1. Tax audit: a right specific to the tax administration
In terms of regulations, the Moroccan general tax code through article 210 gives the right to the tax administration to control all the declarations and acts used to identify the tax base. In accordance with this legal principle, the Moroccan taxpayer, legal / natural person, is obliged to provide all the supporting and accounting documents deemed necessary by the sworn agents of the tax administration. Article 210 of the CGI also applies to companies companies having a direct or indirect relationship with foreign entities. The latter must provide the tax authorities with any documentation that justifies their transfer pricing policy.
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2. What are the stages of a tax audit in practice?
A tax audit approach in practice revolves around several key points:
a) Verification notice for tax audit
Before carrying out a tax audit of a company, the tax administration has the obligation to inform the taxpayer by an audit notice, in which it mentions the date of the start of the audit but also the fiscal years or taxes covered by the audit. .It should be noted that the verification operation can only begin upon expiry of the minimum period of fifteen days following the date of delivery of the verification notice. If the administration does not respect the minimum period of fifteen days, the procedure lapses. The verification notice, is a letter must include the following information:
The name and rank of the verifying agent;
The period covered by the verification;
The nature of the taxes to be verified;
The date of the start of the verification operation which begins from the 16th day following the date of notification of the said notice.
The administration attaches to the notice of notification the charter of the taxpayer which includes the rights and obligations of the latter in terms of tax audit.
b) Accounting verification
With reference to the right of control held by the Moroccan tax administration, the taxpayer is required to present all the documents and acts used for the declarations of taxes, duties and taxes (Art 210-CGI). In other words, a natural or legal person, the latter is obliged to provide any supporting document or accounting element deemed necessary by the sworn agents of the tax administration having the status of inspector grade and commissioned to work on tax audits. For taxpayers whose accounts are kept electronically, they are required to present all accounting documents on electronic media. With regard to companies with direct/indirect dependency links with companies located outside Morocco, they must provide the tax authorities with documentation to justify their transfer pricing policy in accordance with the provisions of the article 214-III of the CGI (Transfer pricing documentation to be treated independently in another article?). When there is a lack of presentation; during verification; part or all of the accounting documents and supporting documents provided by the tax authorities, the taxpayer subject to the tax audit is invited to produce all the required elements within 30 days of the request for communication of the said documents and documents . It should be noted that the tax agent cannot require the taxpayer to send him to his office accounting documents or extracts from his accounts and cannot in any case keep in his possession the originals of the books and accounting documents except with the express authorization of the taxpayer and provided that he delivers a detailed receipt for the said books and documents.
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Tax audit: Where is the audit located?
In accordance with article 212 of the CGI, the place of verification is as follows:
Legal persons: the registered office.
Natural persons: tax domicile or main establishment.
Non-resident taxpayers in Morocco: the elected tax domicile.
For companies in liquidation, verification operations are carried out in the tax domicile or the principal establishment of the liquidator, the elected tax domicile or the place where the accounting documents of the company in liquidation are kept.
How long does a tax audit last?
In terms of duration, the verification can extend over 3 months for companies whose declared turnover excluding tax is less than or equal to fifty million dirhams. For companies whose turnover, excluding declared VAT, exceeds fifty million dirhams, the verification period is six months. The deadlines quoted take place from the 16th day following the date of notification of the verification notice. With regard to the various judgments and suspensions due to the failure of the taxpayer to present documents or the request for information from the tax authorities of the States having concluded with Morocco conventions or agreements allowing an exchange of information for tax purposes in the limit of 180 days, from the date of sending of said requests.
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What are the steps for closing a tax audit?
At the end of the tax audit, the tax administration notifies the tax adjustments in three key phases:
a) The adversarial debate
Before the closing of the audit, the administration invites the taxpayer to take part in an oral and contradictory exchange. For this purpose the taxpayer is informed by means of a model form established by the tax administration of the date fixed for the exchange as well as the closing date of the tax audit. This debate allows on the one hand to the agent auditor to present the tax bases and on the other hand gives the opportunity to the taxpayer to formulate his observations which, in the event that they are deemed justified, lead to a revision of the tax bases.
b) The 1st notification letter
Through this letter, the verifier expresses and formalizes the results of his work. In the case of a rejection of accounting, the latter is required to mention all the anomalies raised or the means and procedures adopted for the reconstitution of the turnover. Through the first letter of notification, the auditor explains by year and by nature of taxes and duties, the notified points of adjustments. They must be detailed, reasoned and justified by the regulatory provisions (tax and accounting). At the end of this letter, the taxpayer has a period of 30 days to communicate his various observations in relation to the notified elements. Once the 30-day period has elapsed and in the absence of a response from the taxpayer, the tax will be established on the basis of the elements notified and can only be contested by way of administrative litigation.
c) The 2nd notification letter
Upon receipt of the taxpayer's response following the first notification letter, the tax authorities have 60 days to process the response elements and take action. If the taxpayer's disputes are well-founded, the auditor is required to revise or abandon the notified bases. In both cases, the latter formulates his opinion by encouraging the taxpayer to give his partial or total agreement as to the elements retained by the administration while reminding him of his right to express his refusal before the various committees responsible for appeals relating to to the tax audit.
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