Bank deposits that exceed reported income face tax checks

Morocco’s tax authority has started reviewing bank accounts with financial activity that does not match the income people have declared, marking one of its biggest steps yet to crack down on tax evasion and undeclared business activity.

The move has raised questions about who could be affected, whether bank privacy is changing, and what happens if someone receives a notice from the tax administration.

The General Directorate of Taxes (DGI) has begun using powers already included in Morocco’s General Tax Code, specifically Article 214, which gives the administration a “right of access” to certain financial information during tax investigations.

According to Hespress AR, regional tax offices in Casablanca, Rabat and Tangier have already started sending notices to account holders whose banking activity appears inconsistent with their declared income.

The first wave of reviews reportedly targets accounts that received unusually large transfers or cash deposits over the past two years, particularly when those transactions appear difficult to explain based on the account holder’s tax declarations.

Some accounts are registered under people officially listed as unemployed despite handling significant amounts of money.

The reviews are not based solely on bank transactions. Tax inspectors are reportedly comparing banking data with information from property records, vehicle registrations and tax declarations, using risk analysis systems to identify cases where spending or financial activity appears higher than declared income.

For people who receive a notice, the first step is not an automatic tax penalty. Instead, the tax administration asks them to explain where the money came from and provide documents supporting those claims.

Depending on the situation, acceptable explanations could include employment income, business revenue, rental income, inheritance, gifts or other legitimate sources of funds backed by evidence.

Officials are particularly looking for signs that some taxpayers may be running undeclared businesses, hiding commercial activity behind personal bank accounts or using accounts belonging to relatives or acquaintances to avoid paying taxes.

Tax inspectors have already encountered explanations ranging from undocumented personal loans and gifts to claims that money belonged to friends or family. In some cases, investigations allegedly found evidence of commercial activity that had never been declared to the tax administration.

If a taxpayer cannot justify the origin of the funds, the process can move to the next stage under Article 216 of the General Tax Code. That provision allows the tax administration to conduct a broader review of the taxpayer’s overall financial situation and reassess annual taxable income based on available financial information.

The administration must still follow legal procedures. Under Article 219 of the tax code, taxpayers must receive a formal audit notice specifying the review period, along with a taxpayer charter explaining both their rights and obligations during the process.

Those contacted generally have up to 30 days to submit supporting documents. If they fail to provide satisfactory evidence within that period, the tax administration can reassess their tax situation and apply the corresponding tax and legal consequences.

Does this mean Morocco can freely access everyone’s bank account? Not exactly.

The measure does not create a new surveillance system or remove banking confidentiality altogether. Rather, it activates powers that have long existed under Morocco’s tax law, allowing tax authorities to request and use financial information as part of tax control procedures.

According to Hespress AR, thousands of taxpayers have already been flagged after risk analysis identified financial movements that appeared inconsistent with their declared income.