Morocco Cracks Down on Dormant Firms: Tax Evasion Crackdown Targets Inactive Businesses

Some of them are already receiving notifications from the tax administration inviting them to file a declaration of cessation of activity. These companies remain registered in the taxpayer register and are subject to ex officio taxation for any unreported transaction, according to Article 228 of the General Tax Code (CGI). The tax authorities can thus determine the tax due based on the available information. This can increase the debts of inactive companies.

"Inactive companies represent a high tax risk, as they are often used to issue fictitious invoices," explains Mohamadi El Yacoubi, a tax consultant, to L’Économiste, adding that these companies remain under close surveillance by the administration due to the potential for fraud. The artificial maintenance of these active companies can be detrimental to the partners and managers. "The tax authorities first send a letter inviting the taxpayer to file the missing returns within 30 days. Failing a response, a second notification specifies the tax bases and any penalties. The tax is then automatically issued. The taxpayer can, however, report the resumption of their activities and regularize their situation," details Mohamed Chorfi, an accountant.

Inactive companies have the obligation to inform the tax administration of the resumption of their activity by letter. The processing of the notification of cessation of activity, provided for in Article 150 of the CGI, is ideally done within 30 days of its receipt. Delivery delays can, however, create disputes over the date of notification. If the processing time exceeds 30 days, the company is automatically registered in the register of inactive companies. As for the ex officio taxation procedure, it remains suspended until regularization.