Informal Auto Parts Market: A Wave of Tax Checks Targeting Garages and Suppliers

Targeted Tax Audits in Casablanca, Rabat, and Tangier Aim at Automobile Garages

The regional tax control services in Casablanca, Rabat, and Tangier have initiated targeted audit operations focusing on several automotive repair garages and quick-service companies. This action follows the identification of irregularities in their tax declarations. These audits also extend to operators connected with public institutions and insurance companies.

Consistent sources indicate that tax inspectors have uncovered dozens of taxpayers exhibiting atypical fiscal situations. This increased vigilance can be attributed to a significant rise in the purchase of second-hand spare parts from the informal market, made without invoices yet accounted for as deductible expenses in financial statements. Several professionals interviewed on this matter noted that sellers of used parts consistently refuse to provide receipts during transactions.

The same sources emphasize that certain operators continue to disregard the provisions of Article 125 bis of the General Tax Code, which subjects the sales of used goods to value-added tax under clearly defined conditions. In light of these infractions, the tax administration has begun implementing tax assessment procedures based on total revenue, disregarding reported expenses, thus paving the way for tax adjustments for many affected companies.

Investigations have also expanded to include suppliers of second-hand spare parts. It appears that the majority operate as limited liability companies (SARL), duly registered; however, some are suspected of engaging in fraudulent practices, including billing for used parts as if they were new. These parts have at times been used in compensation claims presented to insurance companies following traffic accidents.

In some instances, the tax administration is considering activating the provisions of Article 219 of the General Tax Code, which allows for an in-depth review of the overall tax situation of individuals operating outside declared channels. This process looks at the consistency between declared income, incurred expenses, and assets held, including bank holdings, whether personal or deposited in third-party accounts where the taxpayer is the beneficial owner.

The legal framework further clarifies that the tax jurisdiction is determined based on the address listed on the national identity card or residence permit, while also taking into account expenditures that may have been financed by resources accumulated over several fiscal years.

Meanwhile, several garage owners argue during inspections for a more nuanced approach to taxation applied to their activities. They contend that it is unjustifiable to be taxed on their entire revenue, including VAT, when they cannot realistically obtain invoices for all their purchases of second-hand parts from suppliers operating in the informal sector.