Morocco Cracks Down on Fake Invoices: Tax Fraud Now Punishable as Forgery

The Directorate General of Taxes (DGI) will no longer need to go through the Tax Offenses Commission (article 231 of the CGI) to prosecute forgers. The latter now risk prison, reports L’Économiste.

Thus, the tax administration intends to strengthen its arsenal in its fight against fictitious invoices, which is emerging as a "phenomenon that continues to pollute business in Morocco for several years," notes the same source. "The change is significant since if the offense is reclassified as forgery and use of forgery, the fraudster automatically shifts to the penal code. The offense is governed by a special text which is the general tax code, but if it is reclassified as more serious, the public prosecutor can opt for the general penal code. Prison sentences can go up to five years. It all depends on the qualification retained by the investigating judge," explains Me Kamal Habachi, business lawyer, partner at the HB Law Firm.

A real scourge that weighs down the national economy, the phenomenon of fictitious invoices is far from fading. Proof of this, notes the same source, "the amount of undeclared invoices, issued by these phantom companies, is estimated at 30 billion DH for the year 2018 alone. This corresponds to the undue reimbursement of 5 billion DH of VAT that has never been paid upstream," continuing that after the entry into force of the 2021 finance law, the Directorate General of Taxes (DGI) could prosecute the economic operators involved who risk heavy prison sentences depending on the assessment of the investigating judge.

"The administration will prosecute the fraudster not only for the issuance of a fictitious document, but also for the misappropriation of public funds since it is VAT that belongs to the State. This can refer the case to the criminal chamber," warns Me Habachi.

It should be noted that only the issuers will be brought to justice, while the taxpayers who use this strategy to reduce their net income and evade tax will be sanctioned only on a fiscal level. Indeed, "their unconfirmed charges by a probative invoice will be systematically rejected by the tax authorities," specifies the same source.

All eyes are now turned to the House of Advisors, which should soon begin examining the draft finance law.