Morocco Tax Service Denies Coming Exchange of Diaspora Bank Records
Rabat – Morocco’s Tax Service has rubbished claims that it will soon be bound to automatically share the diaspora’s financial records.
The General Directorate of Taxes (DGI) released a press statement on Wednesday indicating it will not have to share tax records with foreign countries as part of an upcoming multinational convention.
This September Morocco will join an international convention on tax standards that is part of a framework by the Organisation for Economic Co-operation and Development (OECD).
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting is a unique multilateral treaty that aims to stop the disappearance of corporate profits by shifting funds abroad and improving tax transparency. The treaty is under consideration by 100 countries and is part of a G-20 mandate.
Automatic sharing of banking details
Observers had commented that as part of this convention, Morocco could be forced to automatically share banking details from its diaspora.
Moroccans living abroad, particularly in the EU, are asked by their resident country to provide details on their financial and real estate holdings in Morocco as part of their tax returns.
While European tax agencies request these details, they have no means of verifying them with Morocco’s tax authorities.
Only France and the US have particular tax-related treaties with Morocco that allow for the automatic exchange of this data, while many feared that joining the OECD convention would extend this to all countries.
The DGI on Wednesday firmly denied the rumors, stating that the upcoming convention membership “does not concern the automatic exchange of information.”
Taxes and remittances
The DGI press release was clearly intended to calm speculation regarding the issue. The brief statement is unlikely to completely dispel fears however, as the DGI specifically indicated the automatic exchange would not occur “in 2021.”
The automatic sharing of banking details is a sensitive topic in Morocco, where the diaspora significantly contributes to the national Gross Domestic Product (GDP).
Read also: Morocco’s Diaspora Remittances Reached $7.54 Billion in 2020
Moroccan expats make up 20% of the country’s population and their remittances (money transfers to Morocco sent from abroad) make up 5% of the country’s total GDP.
Many Moroccans who live in Europe use some of their income to invest in Morocco, buy real estate, or save for their retirement.
Governments in Europe ask Moroccan expats to declare these money flows on their tax returns, yet they did not have any automatic method of verifying this data, leading to fears of the potential for tax fraud in expats’ country of residence.