Legal Certainty in Morocco: Focus on Tax Rulings, Advance Pricing Agreements, and the 2024 DGI Report

Legal certainty is a fundamental issue for any modern economy, and the tax sector is no exception. In Morocco, where attracting investment and ensuring tax compliance are government priorities, establishing a clear and predictable framework for taxpayers is essential. Stability and transparency in taxation not only build confidence among economic stakeholders but also foster a business climate conducive to sustainable growth and investment.

In this context, legal certainty becomes particularly relevant through mechanisms that allow taxpayers to better anticipate their tax obligations and avoid costly disputes or unexpected penalties. Among these mechanisms, tax ruling requests and advance pricing agreements (APAs) play a key role. They offer companies a degree of legal certainty by allowing them to obtain clarifications or official validations from the tax administration before engaging in complex or strategic operations.

To better understand the development of these mechanisms and their impact on Morocco’s tax environment, it is useful to refer to the 2024 activity report of the Direction Générale des Impôts (DGI).

Published annually, this report provides a detailed overview of the actions taken, results achieved, and future policy directions. It is a valuable resource for analyzing how Morocco is strengthening legal certainty in its tax system, particularly through the management of tax rulings and APAs.

This article will therefore explore these two mechanisms in depth: their legal framework, recent developments, and their contribution to tax stability in Morocco, based on the data and initiatives presented in the 2024 DGI activity report.

I. The Concept of Tax Ruling in Morocco

1. Definition and importance for taxpayers

A tax ruling (Rescrit Fiscal) is an official response provided by the Moroccan tax administration to a taxpayer seeking clarification on the interpretation or application of a specific tax rule to their situation. It is a formal opinion that binds the administration, thereby providing legal certainty to the taxpayer.

With a tax ruling, taxpayers can act confidently, knowing that their operations or declarations comply with the applicable legislation. This is especially crucial where tax laws are complex or open to interpretation, helping to prevent potential reassessments or future disputes.

2. Procedure for requesting a tax ruling in Morocco

The process is generally structured and involves several key steps :

• Submitting the request: The taxpayer must send a written request to the tax administration, clearly explaining the issue or situation needing clarification.
• Providing supporting documents: It is recommended to include relevant documents, such as contracts, invoices, or other evidence, to allow the administration to fully analyze the situation.
• Processing time: The tax administration typically has a timeframe of several weeks to a few months to respond. The answer is provided as a formal tax ruling, which must be reasoned and specific.
• Binding nature: Once issued, the tax ruling is binding on the administration, unless the law or circumstances change significantly.

3. Advantages and limitations for businesses

Main advantages :

• Legal certainty: Guarantees that the tax administration considers the chosen position compliant with the law.
• Dispute prevention: Clarifies the tax position in advance, helping to avoid reassessments or penalties.
• Tax planning: Facilitates better planning of business operations legitimately.

Main limitations:

• Limited scope: Covers only the specific issue raised and does not guarantee compliance on other matters.
• Changes in law: Subsequent legal changes may reduce the ruling’s value.
• Cost and time: The process can be time-consuming and may incur costs, especially for preparing documentation.

II. Advance Pricing Agreements (APAs)

1. What are APAs?

LAdvance Pricing Agreements are agreements reached between a company and the Moroccan tax administration before the concerned transactions occur. Their purpose is to determine in advance the transfer pricing method applicable to certain intercompany transactions to ensure tax compliance. These agreements provide legal certainty by preventing future tax reassessments and clarifying pricing methods.

2. Importance in preventing tax disputes

APAs play a crucial role in avoiding disputes over transfer pricing. By establishing pricing methods in advance, they reduce the risk of disagreements with the tax administration regarding compliance. This enables businesses to plan confidently, enhances transparency, and improves compliance with tax rules. Internationally, APAs promote stability and predictability between multinationals and the tax authority.

3. Negotiation and conclusion process

The APA negotiation process is structured and can be lengthy:

• It starts with a formal request by the company, followed by an in-depth review of its operations, pricing methods, and financial documents.
• Discussions with the tax administration then take place to reach a mutual agreement. These may include meetings, information exchanges, or preliminary audits.
• Once agreed, the terms are formalized in a written document specifying the period of validity, selected methods, and any procedures for revision if needed.

Reaching an APA often requires close collaboration, transparency, and mutual trust between the company and the tax administration.

III. Analysis of the 2024 DGI Activity Report

1. Trends in tax ruling and APA requests

In 2024, the DGI recorded a significant increase in tax ruling requests, reflecting a growing desire among taxpayers to secure their tax positions before making important decisions. This trend demonstrates a pursuit of transparency and predictability in tax management.

Similarly, the number of APAs signed also increased, indicating that businesses and investors are increasingly seeking to clarify their tax status in advance, creating a more stable business climate.

2. Key figures and statistics

• Nearly 100% of tax ruling requests were processed within three months.
• In 2024, 66 advance tax consultation requests were submitted, an annual increase of around 23%.
• The satisfaction rate of taxpayers who obtained a tax ruling or APA reached about 80%.
• The total number of APAs signed in 2024 increased by 15% compared to the previous year. Three APAs were signed: two new agreements and one renewal.

3. DGI recommendations to improve legal certainty

• Enhance staff training to better understand complex tax issues.
• Simplify and further digitalize procedures to improve accessibility and transparency.
• Promote proactive communication with taxpayers, such as through information sessions and workshops.
• Encourage the use of tax rulings and APAs as preventive tools rather than punitive ones to foster constructive dialogue.

Overall, the DGI appears committed to continuous improvement, aiming to offer a safer, more transparent, and predictable tax environment — which is key to attracting and reassuring investors and taxpayers in Morocco.

Conclusion

Ultimately, this article highlights the main challenges and developments regarding legal certainty in Moroccan tax law, emphasizing the crucial importance of a clear, coherent, and stable framework for building taxpayer trust.

Enhanced legal certainty is a powerful lever to encourage investment, support economic growth, and ensure better tax compliance. It also helps reduce uncertainty and risks related to differing interpretations of tax rules, benefiting both businesses and the tax authority.

Looking forward, there is potential for continued improvement through legislative reforms simplifying and clarifying the tax framework and through new administrative practices. These initiatives aim to strengthen transparency, predictability, and mutual trust between the state and economic stakeholders. The digitalization of procedures, regular publication of guides and case law, and the creation of dialogue and consultation mechanisms are tools that will make the tax system more accessible and fair.

It is also important to highlight that these efforts are part of Morocco’s broader strategy to modernize its tax administration and align its practices with international standards of transparency and anti-tax evasion measures. International cooperation, especially within the OECD and other organizations, also plays a key role in this process.

For further details and updates, readers are encouraged to consult the DGI annual report, which offers a detailed view of ongoing reforms, achievements, and challenges to ensure a more stable, fair, and attractive tax environment for all.