Transfer Pricing and Free Zone Companies in Morocco
Free zone companies belonging to international groups often carry out intra-group transactions (purchases, services, royalties) that fall under transfer pricing rules. Morocco has strengthened its framework: documentation is now mandatory above certain thresholds, under penalty of sanctions. This article reviews the obligations a free zone company needs to know.
What is transfer pricing?
Transfer pricing is the price at which related companies (in the same group) invoice their transactions. The reference principle is the arm’s length principle: prices charged between related entities must match those that would have been agreed between independent companies. The administration ensures that profits are not artificially shifted.
The documentation obligation in Morocco
Transfer pricing documentation is mandatory for companies whose turnover or gross assets exceed MAD 50 million (Article 214-III of the General Tax Code). The framework, specified by Decree No. 2.22.1020, follows OECD standards and rests on a master file (global) and a local file (detailed). The Tax Code recognises the five OECD methods (comparable uncontrolled price, resale price, cost plus, transactional net margin, profit split).
Why it is crucial in a free zone
A company in an Industrial Acceleration Zone benefits from a favourable regime (IS exemption then a reduced rate of 20%). The intra-group flows it carries out are therefore particularly scrutinised: a poorly justified transfer price can lead to a reassessment and weaken the company’s position during a tax audit. Documenting and justifying transfer prices is thus an essential component of compliance.
Penalties for non-compliance
Failure to produce transfer pricing documentation within the prescribed time exposes the company to a fine of up to MAD 500,000. Building solid, up-to-date documentation is therefore as much a protection as an obligation.
How Cabinet Dami & Associés supports you
Mastering transfer pricing requires a functional analysis, the choice of the appropriate method and the preparation of master and local files. Since 1991, Cabinet Dami & Associés supports subsidiaries and groups established in free zones with their tax compliance, in connection with tax and social advisory. To secure your file, contact our experts.
FAQ — Transfer pricing in a free zone
Which companies are concerned by the documentation?
Those whose turnover or gross assets exceed MAD 50 million (Article 214-III of the Tax Code).
Which documents must be prepared?
A master file (group information) and a local file (transactions of the Moroccan entity), in line with OECD standards.
What penalty for non-compliance?
A fine of up to MAD 500,000 for failure to produce the documentation on time.
Conclusion
For free zone companies belonging to a group, compliance with transfer pricing rules is now unavoidable above MAD 50 million. To build solid documentation, talk to the experts at Cabinet Dami & Associés.
Official source: General Tax Directorate — Tax Code (art. 214-III) and Decree 2.22.1020.
