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To OECD, Morocco meets less than half of its minimum standards in dispute settlements

In a recent report, the Organization for Economic Cooperation and Development addressed Morocco’s shortcomings in dispute settlements. The country only meets less than half of the required minimum standards of an international arrangement for resolving cross-border tax disputes.

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Morocco meets less than half of the minimum standards of an international arrangement for resolving cross-border tax disputes, the Organization for Economic Cooperation and Development (OECD) said on Monday.

In a recent report, the OECD revealed that Morocco has a set of deficiencies that it is working to address. It indicated that the country has a «relatively large tax treaty network, with over 75 tax treaties». The Kingdom has recently created a mutual agreement program (MAP). The report explains that the country has little experience with resolving MAP cases.

According to the same source, more than 20% of Morocco’s tax treaties «contain a provision stating that mutual agreements shall be implemented notwithstanding any time limits not the alternative provisions to set a time limit for making transfer pricing adjustments».

Treaties to update and amend 

Furthermore, the report reveals that almost 15% of Morocco’s tax treaties «do not contain the equivalent of Article 25 of the OECD Model Tax Convention either because they do not contain the equivalent of Article 25, first sentence of the Model of the OECD Tax Convention or because they do not contain the equivalent of Article 25, second sentence, of the OECD Model Tax Convention, as the timeline to file a MAP request is shorter than three years from the first notification of the action resulting in taxation not in accordance with the provision of the tax treaty».

To meet the minimum standards and secure an effective dispute resolution mechanism under the Action 14 Minimum Standard, Morocco has to «amend and update a certain number of its treaties», OECD wrote.

«In this respect, Morocco signed the Multilateral Instrument, through which a number of its tax treaties will potentially be modified to fulfil the requirements under the Action 14 Minimum Standard», it explained.

Morocco has promised to negotiate changes to tax treaties bilaterally and said that it is «currently working on a plan, prioritizing jurisdictions with which Morocco has close economic ties».

«Morocco does not meet the Action 14 Minimum Standard concerning the prevention of disputes. It has in place a bilateral APA program, but this program does not allow roll-backs of bilateral APAs», it added.

As for the availability and access to MAP under Action 14 Minimum Standard, Morocco meets the needed requirements, by providing access to MAP in «all eligible cases although it has since 1 January 2019 not received any MAP request from a taxpayer».

«Morocco does not have in place a documented bilateral consultation or notification process for those situations in which its competent authority considers the objection raised by taxpayers in a MAP request as not justified», the report argued. It explains that the country has not published «guidance on the availability of MAP and how it applies this procedure in practice under tax treaties».

Morocco meets almost all of the other requirements under the Action 14 Minimum Standard in relation to the resolution of MAP cases.

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