Billion-Dollar Tax Scandal Rocks Morocco’s Real Estate Sector

These reports indicate cases of tax evasion through the exploitation of tax exemptions granted to housing cooperatives and associations, which has led some of them to liquidate their own companies. Tax inspectors are conducting investigations to determine the identity and responsibility of the persons involved in these cases, including presidents of housing associations, elected officials and municipal and other public administration officials who abuse their functions to revise the lists of beneficiaries and create fictitious sales contracts in order to justify expenses and expropriate the land of others.

The controls were carried out in the cities of Témara, Harhoura, Kénitra, El Jadida, Bouskoura and Daroua, and revealed the transformation of non-profit housing cooperatives into large real estate groups generating several billion in profits for developers, not declared to the tax authorities. The investigations also found that developers buy buildable land before opening memberships to the public, then use the amounts collected from members to finance construction work, pay land installments, and even cover non-real estate personal projects.

The proliferation of advertising boards on construction sites clearly indicating the selling price per square meter in residential units under housing association projects has also drawn the attention of tax inspectors, who have stepped up their actions to verify the minutes and accounting records kept by the management offices, revealing serious irregularities, including the manipulation of membership lists, the registration of land lots in the name of fictitious members as part of the development of secondary subdivisions, which are then transferred to others in exchange for large sums.

In collaboration with the National Agency for Land Conservation, Cadastre and Cartography, the tax inspectors noted serious irregularities in the acquisition of land for construction at prices lower than their real value. These properties are then resold at exorbitant prices to members. These controls carried out with Bank Al-Maghrib aim to strengthen the transparency of real estate transactions and limit arbitrary price assessments when calculating tax amounts and resulting tax adjustments.