Morocco

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Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Phase 2 Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Only limited companies and partnerships limited by shares can legally issue bearer shares in Morocco, which represents less than 9% of companies with share capital. Of these, only those that expressly included this possibility in their articles of association can issue such shares. The examination by the Moroccan authorities of the articles of association of all limited companies and partnerships limited by shares did not identify any companies that had included this option in their articles of association. Although a review of corporate records did not reveal that any bearer shares had been issued or were in circulation in Morocco, Morocco still allows limited companies and limited partners of partnerships limited by shares to issue them without having introduced arrangements whereby their holders can be identified under all circumstances.  Morocco should take the necessary measures to ensure that appropriate arrangements are in place such that the holders of bearer shares can be identified under all circumstances. 
There are no penalties to enforce the obligation for limited companies, which represent less than 9% of companies with share capital in Morocco, to maintain a share register and the obligation, for companies, to file and keep the originals of correspondence received and copies of correspondence sent.  Morocco should ensure that penalties exist in all cases for non-compliance with legal provisions relating to the identification of the owners of relevant entities. 
Phase 2 Rating Factors Recommendations
Partially Compliant.     
   
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   According to Moroccan laws, accounting records and supporting documentation must be kept for 10 years. However, there is no direct sanction for failure to respect this obligation, although dissuasive tax sanctions can be applied in this case. However, given the time-bar rules, the sanction for failure to keep accounting records or supporting documents beyond the four years of the time-bar is not guaranteed in certain situations.  Morocco must ensure that appropriate sanctions are applicable in all cases for non-compliance with the requirement to keep accounting records including supporting documentation for at least five years. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  During the review period, the right to information of the tax administration, which is its main power to obtain information from third parties, did not include a compulsory time limit to reply. Moreover, the sanctions applicable for failure to respond to the right to information were not dissuasive. However, the provision relating to the right to information has been modified recently. Since 1st January 2016, the right to information includes a compulsory 30-day time limit to reply and dissuasive sanctions.  Morocco should monitor the effective application of the new provisions regarding the right to information in practice. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   8 of the tax agreements signed by Morocco before 2014 as well as the Multilateral Convention signed on 21 May 2013, which offers Morocco 54 potential new EOI partners, are still not in force in Morocco.  Morocco must ensure that the EOI agreements it signs enter into force rapidly. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     Morocco should continue to extend its EOI network in compliance with the standard. 
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Partially Compliant.  Over the review period, Morocco was only occasionally able to provide timely responses to its partners. Thus, the 90-day response rate is just 17%; only 42% of requests from Morocco’s partners received a response within a year, and 28% of requests are still awaiting a response. However, Morocco improved its response times immediately after the review period and this progress should improve further with the implementation of an EOI unit and the publication of an EOI manual.  Morocco should ensure that it responds in a timely manner to all EOI requests from its EOI partners. 
Over the review period, Morocco did not inform its EOI partners of the status of their requests when it failed to provide the information within 90 days of receipt of the request, sometimes including when a reminder has been received.  Morocco should systematically provide a status update to its EOI partners in situations when the competent authority is unable to provide a response within 90 days of receipt of the request. 
Over the review period, despite the high number of EOI requests, the EOI process was dealt with in an ad hoc manner, involving a number of departments that were not dedicated specifically to this task. Thus, as a result of the complex organisation, inadequate steering, non-documented processes and non-dedicated resources, Morocco was unable to process the EOI requests from its partners efficiently and in a timely manner. However, Morocco has recently approved the creation of a dedicated EOI unit and an EOI manual is in the process of being written, which should improve the way EOI requests are processed.  Morocco should accelerate the implementation of a suitable organisation and monitoring system for the processing of EOI requests from its partners, in particularly by adopting internal deadlines for processing requests and a documented process, in order to ensure that in all cases, EOI partners receive timely responses to their requests. 

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.