Real Estate Fraud Scandal Rocks Morocco: Tax Evasion and Fake Contracts Exposed

The control operations carried out on sales deemed suspicious, as part of tax audits, reveal a number of shortcomings, including the obtaining of falsified certificates by certain developers and owners. Taking advantage of the gaps in the banking supervision system, they have deceived banking institutions by passing off fictitious charges as actual expenses, in order to benefit from undue tax advantages. Tax audits have revealed that several owners and developers are involved in partially "off-the-books" sales, through trapped contracts, according to sources at Hespress.

Due to these contractual arrangements, buyers are forced to sign parallel deeds to the official contracts, particularly for apartments benefiting from public subsidies, under the old or new system. These ancillary deeds included additional work and renovations, the amounts of which sometimes exceeded 100,000 dirhams, the same sources point out, stressing that the examination of erroneous tax returns has revealed significant financial dysfunctions in the accounts of certain real estate companies.

By discovering the manipulation of invoices and the artificial increase in expenses, the tax inspectors were able to detect several cases of corporate tax evasion. For example, a real estate developer in Casablanca sold social housing apartments for 380,000 dirhams, based on renovation and finishing contracts signed before a notary. Also in Casablanca, another real estate developer marketed a project based on ancillary contracts that were never executed. In doing so, he would have managed to evade more than 7.6 million dirhams in taxes. He was also prosecuted by the investigators.

The DGI has subsequently sent regularization notices to the clients concerned. They must pay the difference in registration duties related to the acquired properties.