Moroccan Tax Evasion Scandal: Illegal Used Car Dealers Exploit Public Spaces in Major Regions

Several tens of millions of dirhams escape the Moroccan tax authorities each year, notably due to the activity of used car sellers occupying spaces belonging to the public domain, such as public squares and municipal parking lots, without being subject to tax deliberations from local authorities. This is revealed by reports from the interior affairs services of the prefectures of the Casablanca-Settat, Marrakech-Safi and Tanger-Tétouan-Al Hoceïma regions. These reports note a growth in the used car trade activity using public spaces and free municipal parking lots, where the vehicle fleet of some sellers has exceeded the threshold of one thousand vehicles, while they operate outside of an organized legal framework (company or individual), at a time when these markets are experiencing high traffic, particularly during the summer season.

It emerges from the reports that some beneficiaries of public auction markets and adjudications are exploiting municipal property to park and store their cars pending resale. The reports point to collusion between these used car dealers and elected officials and law enforcement agents. The used car dealers make sure to exploit public spaces and parking lots near administrative annexes, bank branches and vehicle registration centers, in order to facilitate sales and transfer of ownership operations, the same sources pointed out, specifying that these operations take place outside the channels of direct bank transfer from account to account and are based on cash payments; which places the activities of these merchants outside the scope of taxation, due to their non-compliance with the entrepreneurial framework linked to a common business identifier (ICE).

These activities thus escape any taxation or subjection to municipal tax decisions. According to sources interviewed by Hespress, the reports reveal a shortfall of several tens of millions of dirhams per year, due to the neglect of the "taxation" of used car sales markets exploiting public property and spaces, and their non-subjection to tax deliberations from local authorities.

In accordance with Article 219 of the General Tax Code, which requires the Tax Directorate’s services to notify the taxpayer of a verification notice in accordance with specified procedures, setting the period for this examination, the Directorate General of Taxes (DGI) has recently subjected a number of used car dealers to an examination of their entire tax situation as individuals. These dealers are invited to provide all the necessary justifications and to present the documents to clarify the contradictory or divergent elements noted, within a period of thirty (30) days from the receipt of the administration’s request.