Casablanca – In an effort to enhance transparency and combat tax evasion, Morocco’s General Directorate of Taxes (DGI) has introduced stricter monitoring measures for businesses that repeatedly declare losses or report no taxable profits. The move aims to close loopholes that have allowed some companies to avoid paying their fair share of taxes by manipulating financial statements.

Mandatory justifications for declared losses

Under the new regulations, companies submitting tax returns that indicate a financial deficit or an absence of profit must now provide a detailed justification. This explanation must adhere to a standardized format prescribed by the DGI and be signed by the company’s legal representative. The requirement, outlined in Article 20 of the 2024 General Tax Code, seeks to improve accountability and curb potential tax fraud.

Failure to submit the required justification may result in penalties, with fines reaching up to $200. Moreover, the DGI has been granted the authority to audit accounting records dating back up to ten years, especially in cases where inconsistencies or suspicious reporting patterns are detected.

Crackdown on persistent loss-declaring companies

Authorities have observed a surge in the number of businesses consistently reporting losses without valid explanations. The concern is that some companies, particularly small and medium-sized enterprises (SMEs), might be inflating expenses or underreporting income to evade tax obligations.

Recent audits have already flagged several companies, particularly in key sectors such as construction, public works, tourism transport, and hospitality, for significant accounting irregularities. In some cases, businesses were found to have exaggerated their operating costs or understated revenues, enabling them to claim unjustified tax reductions. These firms, many of which operate in the Rabat-Casablanca economic corridor, have now been issued official notifications requiring them to rectify their accounts or face further investigation.

Ensuring compliance through professional accounting practices

To navigate the evolving tax landscape, experts recommend that businesses engage certified accountants who can ensure accurate and compliant financial reporting. Proper bookkeeping and timely submission of required documents help companies avoid penalties and maintain smooth operations.

Additionally, businesses should leverage technology, such as data analytics and artificial intelligence tools, to improve financial transparency and detect anomalies in tax declarations before they attract scrutiny from authorities.

With Morocco intensifying its crackdown on tax evasion, businesses must adapt by prioritizing financial transparency and compliance. The new tax measures are designed to discourage fraudulent reporting while ensuring a fair and balanced economic environment. Companies that proactively align their practices with regulatory expectations will not only avoid legal risks but also contribute to a healthier business ecosystem in the country.