Morocco publishes new procedures for Advance Pricing Agreements

Royal Palace in Rabat, Morocco

Global Tax Alert


Morocco has published Ministerial Decree No 2.16.571 outlining the procedure for concluding advance pricing agreements (APAs) with the Moroccan tax authority.

The Decree provides that a Moroccan resident taxpayer that has direct or indirect dependency relationships with entities situated outside of Morocco may conclude an APA with the Moroccan tax authority. Both unilateral and bilateral APAs are available.

The APA procedure adopted under the Decree consists of four distinct stages:

  1. Pre-filing
  2. Formal submission
  3. Review and negotiation
  4. Implementation and compliance

The APA application process


The Decree specifies that before a formal request for an APA is submitted, taxpayers may take part in a preliminary meeting with the Moroccan tax authority. The purpose of this meeting is to discuss the nature of the information required in the APA application in order to analyse the taxpayer's transfer pricing policy, plan a meeting schedule during the review and negotiation of the agreement, and fulfil any other requirements that might be necessary to conclude the APA application process.

Formal submission

Taxpayers seeking to apply for an APA must submit a formal request to the Moroccan tax authority at least six months before the beginning of the first year the APA is envisaged to cover.

The Decree specifies that an APA application should include:

  • identities of the associated entities
  • operations covered by the proposed APA
  • proposed duration of the APA
  • proposed transfer pricing method(s) to be used and critical assumptions relied upon in selecting such method(s)
  • organisational structure of relevant entities
  • business plan of the taxpayer
  • tax and financial documents of the relevant entities for the past four years, as certified by the relevant foreign competent authorities
  • accounting standards used by the relevant entities
  • business industry of the relevant entities
  • general description of the functions exercised, assets used, and risks assumed by the relevant entities
  • detailed description of intangibles held by the relevant entities
  • description of the target market of the business industry
  • description of controlled transaction(s)
  • agreements between the relevant entities
  • cost-sharing arrangements between the relevant entities
  • any APAs concluded by the taxpayer with foreign tax authorities, as well as any rulings issued by those jurisdictions
  • identification, analysis, and selection of comparables, including supporting documents and potential adjustments for comparability purposes

There is no fee payable for filing the APA request.

Review and negotiation

During the review and negotiation stage, the Moroccan tax authority will analyse and evaluate the APA application and supporting documentation and, if a bilateral or multilateral APA, negotiate with the relevant tax treaty partner(s), before putting an agreement to the taxpayer for signing. Further documentation may be requested during this stage.

Implementation and compliance

The concluded APA must include the following details:

  • period covered by the agreement
  • date of entry into force
  • description of the operations covered by the APA
  • description of the selected transfer pricing method(s) and critical assumptions relied upon in selecting such method(s)
  • monitoring procedures
  • circumstances that may result in the review of, or cancellation of the APA

The APA will cover a period of up to four years. Taxpayers must submit a report each year to the Moroccan tax authority that covers the following:

  • evidence of the application of the transfer pricing method as specified under the APA
  • summary of any modifications of the original terms required due to changing circumstances
  • organisational structure of relevant entities
  • a copy of the taxpayer's annual report

Morocco is a signatory to more than 60 tax treaties

The Mutual Agreement Procedure (MAP) article in tax treaties that mirror article 25 of the OECD Model Convention on Income and on Capital provides the mechanism for tax treaty partners to negotiate bilateral and multilateral APAs. Morocco is a signatory to tax treaties with more than 60 countries, including Belgium, China, Germany, Italy, Luxembourg, the Netherlands, Spain, the UK and the US, all of which contain the MAP provision for the purposes of negotiating bilateral, or multilateral APAs.

APAs are quickly becoming the strategy of choice for multinationals, as a way to ensure that they are proactively managing the transfer pricing risks associated with cross-border transactions.

The APA process, which is voluntarily initiated by the taxpayer, provides a cooperative way to resolve disputes or potential disputes, by fostering a constructive working relationship between the taxpayer and the tax administration(s).

The benefits of an APA include:

  • Elimination of the potential for double taxation
  • Certainty for resource-plan and tax management purposes throughout the life of the APA
  • Dispute resolution on a prospective basis
  • Reputational enhancement with tax administrations and the general public
  • Cost savings through the avoidance of paying potential audit and dispute costs

The Moroccan tax authority is expected to publish a circular with more detail about the APA procedure.

See our APA and MAP Country Guide for more information about APAs, and find out more about the Moroccan APA procedures by contacting any of the authors.