Money laundering : Tax fraud gets a free hand
Morocco came close to criminalizing tax fraud once and for all, like many other countries. That was in 2016. But an amendment was narrowly introduced by the Finance Commission to remove the measure and return to the original situation. As a result, tax evasion is a national sport that continues to be regarded as a minor offence punishable by a light penalty compared with the sentences imposed on « tax evaders « in other climes, where they are sentenced to prison even if the evaded tax is paid, accompanied of course by a heavy fine. So it is hardly surprising that two thirds of companies subject to the corporate tax have been reporting losses for many years. Around one third can be explained by normal start-up difficulties, but for the rest, it is a case of recurrent tax evasion. Article 192 of the General Tax Code (CGI) contains a restrictive list of offences, which can only be detected during a tax audit (article 231 of the CGI). These cases of fraud are punishable at most by a fine of between 5,000 and 50,000 Dirhams (USD 500 and 5,000) and a jail sentence of one to three months.
Moreover, the Directorate General of Taxes (DGI) can only resort to the courts after receiving the opinion, albeit advisory, of a Tax Offences Commission (Commission des Infractions Fiscales), which has been in existence for several years but has never been activated due to a lack of implementing legislation. Decree No. 2-22-283 setting out the commission’s organization and operating procedures was published in the Official Gazette No. 7269 on January 29. Now all that remains to be done is to appoint the members of the commission and define their terms of office. There is one small advance in the system: since 2021, tax authorities are no longer obliged to seek the advisory opinion of the Tax Offences Commission when they discover fraud, forgery, or the use of bogus invoices, and only in these cases.
Two people have already been sentenced to 2 and a half years in prison for issuing fictitious invoices, one in the city of Fez and the second one in Casablanca. Penalties are at the discretion of the magistrate, since the General Tax Code does not provide for prison sentences of more than 3 years. Other cases are currently being investigated by the courts in various cities across the Kingdom. It should be noted, however, that while the CGI code assigns criminal liability to the issuer of bogus invoices, the judge may decide on his own initiative to also prosecute the users for forgery and use of forgeries. But this is not systematic. The people concerned are not reported to the tax authorities by their banks, even though they note that these entities have no social security charges, no real activity and never take out a bank loan.
However, these tax offences are not considered to be cases of money laundering within the meaning of Law No. 43-05. In fact, Article 574-3 sets out a list of offences that can be assimilated to money laundering: illicit trafficking in narcotics and psychotropic substances, human beings, immigrants, corruption, counterfeiting, breach of trust and even the sale of personal data files, but not tax fraud. The implications are far-reaching. For individuals, money laundering offences are punishable by 2 to 5 years’ imprisonment and a fine of 20,000 to 100,000 Dirhams (USD 2,000 to 10,000). In the case of legal entities, the penalty is a fine of 500,000 MAD (USD 500 and 5000) to 3 million Dirhams (USD 300.00), not forgetting any penalties that may be imposed on business owners and directors. In certain defined cases, these penalties can be doubled, which should prove particularly interesting.
Hassan EL ARIF
