Transfer prices are the prices used in dealings between related enterprises: goods, services, financing, royalties, guarantees and assets. In Morocco, these dealings must produce an outcome comparable to what independent enterprises would accept in similar circumstances.
When are enterprises related?
The relationship may arise from direct or indirect ownership, common control or factual dependence allowing one enterprise to impose commercial or financial conditions. Moroccan subsidiaries, parents, sister companies, permanent establishments and common-control structures should map their dealings.
The rules cover both expenses paid abroad and income undercharged by the Moroccan company. The tax authority may add back profits indirectly shifted through inflated or reduced prices, excessive royalties, abnormal financing or other means.
Transactions carrying the greatest risk
| Intercompany flow | Core question | Expected evidence |
|---|---|---|
| Goods | Comparable price, margin, volume, quality, Incoterm and market | Contracts, invoices, segmented results, comparables and Customs consistency |
| Services and head-office charges | Actual, beneficial, non-duplicated and non-shareholder service | Deliverables, time, costs, beneficiaries and allocation key |
| Royalties | Right actually licensed and economic value to the subsidiary | Licence, ownership, use and comparables |
| Loans/current accounts | Debt capacity, rate, currency, term and security | Agreement, credit analysis, comparable rates and schedule |
| Guarantees | Actual benefit and independent remuneration | Interest saving, guaranteed risk and comparable offers |
| Restructuring | Transfer of functions, risks, customers or intangibles | Valuation, decisions, contracts and business rationale |
The arm's-length standard
The analysis starts with functions performed, assets used and risks actually controlled by each entity. Contracts must match conduct. A subsidiary described as a low-risk distributor should not bear continuing risks and losses it does not control; legal ownership of an intangible alone does not justify a high return.
Product characteristics, market, volume, strategy, currency and customer credit affect comparability. The defensible outcome may be a range rather than one exact price.
Selecting a method
- Comparable uncontrolled price: directly compares a sufficiently similar independent price.
- Resale price: starts with the customer resale price and deducts an appropriate distribution margin.
- Cost plus: applies an arm's-length mark-up to a properly defined cost base.
- Transactional net margin: compares a net return on sales, costs or assets with independent businesses.
- Profit split: allocates combined profit for highly integrated dealings or unique intangibles.
The method must be the most appropriate for the facts and available data. A group average or parent-selected percentage is not itself a method.
Who must document in 2026?
The formal obligation applies to a Moroccan taxable business dealing with related enterprises outside Morocco where its declared turnover excluding tax or gross balance-sheet assets are at least MAD 50 million.
For a controlled-transaction category below the decree's MAD 1 million excluding-tax materiality threshold, parts of the detailed local-file information may be reduced. The transaction remains subject to arm's-length pricing and still needs agreements and evidence.
Master file and local file
Master file
Describes group organisation, businesses, profit drivers, intangibles, financing, general transfer pricing policy and relevant consolidated tax positions.
Local file
Describes the Moroccan entity, management and strategy, transaction categories and amounts, contracts, functional analysis, method, tested party, comparables, adjustments and reconciliation to annual accounts.
Management fees and intercompany services
The subsidiary must show that an identifiable service was rendered and that an independent business would pay for it or perform it internally. Shareholder costs, parent investment monitoring, duplicated services and incidental benefits are vulnerable.
Allocation keys should reflect consumption: headcount for some HR services, users for IT, transactions for accounting, and revenue only where relevant. The cost base should exclude unrelated expenditure and distinguish pass-through costs.
Tax, withholding and bank transfers
An arm's-length charge is not automatically deductible or transferable. Withholding tax, VAT on imported services, interest limitations, tax treaties, beneficial ownership and Foreign Exchange Office requirements require separate review.
The bank reviews the agreement, invoice and service before transferring funds; the tax authority may later test reality, benefit and amount. Banking and tax files must describe the same transaction.
Transfer pricing and Customs
For related-party goods, a higher price often increases customs value but reduces the importer's taxable profit; a lower price does the reverse. Customs and tax authorities pursue different objectives. Year-end true-ups and debit or credit notes should be planned across agreements, customs value, VAT and payment rules.
Audit and penalties
During an audit, the authority may demand electronic documentation and test comparables, losses, restructurings and payments to preferential-tax jurisdictions. Following the formal notice process, failure to provide adequate documentation may trigger a penalty of 0.5% of the relevant transactions, with a minimum of MAD 200,000 per audited financial year, in addition to corporate-tax adjustments, interest and other assessments.
A Moroccan adjustment may create double taxation unless the other state grants a corresponding adjustment. Treaty mutual-agreement procedures should be considered promptly.
Advance pricing agreements
A business dependent on enterprises outside Morocco may request an advance agreement with the tax authority on its pricing method for up to four financial years. APAs can secure recurring, material or hard-to-value flows but require transparency, critical assumptions and continued consistency with the disclosed facts.
Action plan for a Moroccan subsidiary
- Map related parties and flows. Goods, services, interest, guarantees, royalties and exceptional dealings.
- Match contracts to conduct. Who decides, employs people, owns assets and controls risk?
- Segment accounts. Isolate results by business and transaction category.
- Select and test the method. Use the best comparables and document adjustments.
- Correct before closing. Review invoices, withholding, VAT, Customs, exchange and accounting.
- Complete the local file. Reconcile schedules to the tax return and preserve evidence.
- Monitor annually. Update facts, contracts, margins, comparables and thresholds.
Frequently asked questions
Can a subsidiary below MAD 50 million ignore transfer pricing?
No. The threshold concerns formal Article 214 documentation; the arm's-length rule and adjustment power still apply.
Does a loss automatically prove non-compliance?
No, but it needs support from functions, risks, start-up conditions, market facts or genuine events, especially for a supposedly low-risk entity.
Is the group's OECD file enough?
No. The local file must address the Moroccan entity, agreements, dealings, economic analysis and accounting reconciliation.
Can a 5% mark-up be applied to every service?
No. The return must follow the service, cost base, functions and reliable comparables; some costs support no mark-up or charge.
Official sources: 2026 General Tax Code · Decree No. 2-22-1020 — transfer pricing documentation · Consolidated text on Adala.
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