Phony invoices: The tax authorities prepare strong enforcement measures21%,

Criminal sanctions for of­fences (article 231 of the Gene­ral code on criminal sanctions) in case of issuance of phony invoices will soon be applicable. The Directo­rate General of Taxes (DGI) is current­ly working on a draft decree that will make issuers of phony invoices liable to jail sentences. The announcement was made by Khalid Zazou, acting director general, at the members’ forum held on Thursday 10 March by the French Chamber of Commerce and Industry of Morocco. The article in question pro­vides for jail sentences for natural per­sons who are found to have committed an offence or to have been responsible for it, or if it has been proven that said offence was committed on his/her ins­tructions and with his/her consent. The imprisonment of a fraudster may be pronounced by a magistrate, regardless of his/her legal status. The same penalty applies to persons who have been ac­complices to the facts in question, or who have assisted or advised the party involved in the making of a phony in­voice. Tax authorities are stepping up the fight against this scourge because of the fiscal stakes it represents.

One of the key provisions of the 2021 Appropriations Bill involves the introduction of a mechanism to combat the scourge of phony invoices (Article 146 of the General Tax Code on docu­mentary evidence of expenditures). This concept differs from fake invoices in that they do not correspond to any ac­tual transaction. Thus, when the tax au­thorities realize that an invoice is issued in the name of a supplier who is not in good standing with regard to taxes, the expense is not deductible. Not being in good standing means not filing tax re­turns, not paying taxes and not proving a real activity. At the same time, the DGI will publish on its website a list of tax identifiers of defaulting suppliers. This list will be updated on a regular basis after final judgment in accordance with the provisions of Article 231 of the CGI on criminal penalties for tax offences.

According to the tax authorities, despite the mechanism provided by the Appropriations Bill of 2021, phony invoices have continued to proliferate during the same year. «The census conducted by the Tax Department indi­cates that the problem amounts to tens of billions of Dirhams per year under the invoices recovered by some and not declared by others. We cannot admit among us that people continue to issue phony invoices in total impunity, acting carelessly, and within a background of total indifference. The person who issues phony invoices pays his/her an­nual car tax sticker, his/her insurance, and commits himself/herself never to issue a bad check. But when it comes to bogus bills, it’s a national sport because there are no policemen,» said Khalid Zazou, acting Director general of taxes. Despite its severity, the measure did not have the expected deterring effect. For four years, the administration has noted that tens of billions of dirhams are missing from the accounts of some taxpayers while they have been deduc­ted by others. Tax authorities are not yet able to put a figure on the extent of the fraudulent invoices. They still have to wait for the outcome of ongoing pro­ceedings to process the information and distinguish between cases of default and cases of non-effective transactions. However, estimates relating to invoices issued and not declared amount to seve­ral billion of dirhams. Tax authorities point out that this is in fact a double deduction: the counterfeiters deduct the VAT and benefit from the charge that is deducted from the operating income.

Persons who have had an invoice rejected because it was deemed to be inconclusive can always ask the tax authorities to reconsider their position, provided that the invoice was paid by a crossed check that cannot be endorsed. Other means of payment may be accep­ted provided they are traceable. Only when the tax authorities have sufficient evidence will they reject an invoice: the issuer must be both tax delinquent and have no real activity. The two condi­tions are linked. The burden of proof is obviously on the administration.

Regardless of the means of pay­ment, tax authorities remain vigilant. For example, a crossed check that can­not be endorsed is not irrefutable proof of payment. In some cases, it is only a gimmick intended to cloud the issue. When the administration asks the bank for the identity of the person who ulti­mately cashed the funds, it turns out to be the first person who carried out the transaction. The subterfuge consists of creating shell companies using the identity card of a gardener and even of a mentally ill person to use them for fraudulent purposes. Tax authorities are aware of all these practices. «Some fraudsters change companies as they change shirts». The decree in prepara­tion on the implementation of criminal sanctions will make it more visible by fraudsters.

The Directorate General of Taxes (DGI) in figures in 2020

• Gross revenues: 155.99 billion MAD
• Net global revenues: 145.81 billion MAD
• Spontaneous revenues: 148.81 billion MAD
• Revenues following action from the administration: 7.18 billion MAD
• Telepayment (corporate tax, income tax, VAT, registration fees and stamp duties): 135 billion MAD
• Achievement of the forecasts of the amending finance law: 106.5%

HASSAN EL ARIF