Moroccan authorities audit multinational subsidiaries over suspected profit transfers

According to well-informed Hespress AR sources, Morocco’s tax authority (DGI) and the Foreign Exchange Office have launched a joint audit targeting the financial transfers of Moroccan subsidiaries of international companies.

The investigation was prompted by suspicions that significant portions of these subsidiaries’ profits were being moved abroad under the guise of “technical assistance fees” (Frais d’assistance technique), a key indicator of investment trends.

These fees reportedly took various forms, including post-sales service contracts, intellectual property licensing agreements, and secondments of international employees—some of whom were Moroccan expatriates. The latter were allegedly able to transfer part of their earnings to foreign bank accounts.

The audit is focused on transactions involving intangible assets, such as contracts for patent assignments, trademark licensing, and manufacturing methods.

Authorities are assessing the nature, extent, and duration of these rights, along with their geographical scope, exclusivity conditions, and payment methods. Inspectors are also scrutinizing how these intellectual property fees were structured—whether as revenue-based royalties, cost-sharing agreements, or embedded within product or service prices.

A key aspect of the review involves verifying whether these charges align with the contractual terms between subsidiaries and their parent companies.

Tax and exchange control officers are also examining internal group services, including administrative, technical, IT, financial, and commercial support. Special attention is being given to “management fees” (frais de gestion), which parent companies impose on their subsidiaries.

Authorities are evaluating the legitimacy of these fees by verifying the effectiveness of the services rendered, ensuring they provide real value to the subsidiary, and checking for duplications with other services already paid for. Additionally, they are assessing whether these fees align with market rates, particularly in cases involving unbilled technical assistance, excessive commissions, or inflated rental and leasing costs.

The audit coincides with the completion of an investigation by the Tax Authority’s Transfer Pricing and Special Operations Division, conducted in coordination with the Foreign Exchange Office and the Customs and Indirect Tax Administration. This probe examined tax declarations by subsidiaries of multinational groups in Morocco, based on suspicions of profit transfer irregularities.

The investigation revealed that some subsidiaries manipulated the pricing of goods and services received from their parent companies abroad, artificially inflating costs to reduce taxable income. Authorities have already imposed tax reassessments on several Moroccan branches of foreign firms after confirming their involvement in these financial schemes.

The findings suggest that some companies deliberately engineered new methods to transfer profits abroad while avoiding taxation by inflating invoices for services and goods.