Morocco: Tax adjustment for life insurance companies and their policyholders

The Moroccan General Directorate of Taxes (DGI) has terminated an important financial arrangement relating to the partial surrenders of three insurance companies' retirement-savings contracts backed by local banking groups. This litigious act has cost the Moroccan Treasury 600 million MAD (56.721 million USD) in the space of three years.

For years, the implicated insurers have been arranging for aggressive tax schemes on the partial surrenders of the retirement-savings investments of their parent company's clients, executives and employees.

The objective was to avoid the withholding tax on their clients' income (IR). However, the latter will have to pay the penalty themselves, as the insurance contract mentions that any change in tax regulations or additional tax assessments are to be borne by the policyholder.