United States-Morocco Tax Treaty
Quick Summary. Situated in Northern Africa’s Maghreb region, The Kingdom of Morocco borders the Mediterranean Sea and Atlantic Ocean, as well as Algeria and the Western Sahara. Morocco’s capital is at Rabat and its largest city is Casablanca.
Morocco has a parliamentary constitutional monarchy. Its constitution provides for a Prime Minister who serves as the head of government, a bicameral legislature with with an Assembly of Representatives and the Assembly of Councillors, as well as an independent judiciary. The constitution also grant authority to a king, who serves as both a secure and political leader. Its government has been described as a hybrid regime.
U.S.-Morocco Tax Treaty
Morocco consists of 12 regions and 13 prefectures and 62 provinces.
Morocco Tax Treaty Convention between the United States and the Kingdom of Morocco for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed at Rabat August 1, 1977
Currency. Moroccan Dirham (MAD)
Common Legal Entities. Limited liability company, private limited company, general or limited partnership and branch of a foreign company.
Tax Authorities. General Tax Administration (Direction Générale des Impôts)
Tax Treaties. Morocco has signed approximately 50 income tax treaties, of which around 40 are in effect.
Corporate Income Tax Rate. The corporate income tax rates are progressive from 10% to 31% (on income over MAD 1 million). A 37% rate applies to leasing companies and credit institutions. A foreign contractor carrying out engineering, construction or assembly projects, or projects relating to industrial or technical installations, may opt to be taxed at 8% of the total contract price, net of VAT.
Individual Tax Rate. Rates are progressive from 0% to 38%.
Corporate Capital Gains Tax Rate. Capital gains are treated as noncurrent income and taxed at the normal corporate tax rate.
Individual Capital Gains Tax Rate. Capital gains derived from the disposal of immovable property generally are subject to a 20% tax. Higher rates are applicable in some specific cases.
Capital gains derived from the disposal of shares are subject to tax at 20%.
Capital gains derived from the disposal of a residence used as principal residence for at least six years are exempt from taxation.
Residence. The following individuals are resident in Morocco for tax purposes: (1) individuals who are habitually resident in Morocco; (2) individuals who are present in Morocco for at least 183 days in a given year, whether or not continuously; and (3) individuals whose professional activities or center of economic interests are located in Morocco. A company is resident in Morocco if it is incorporated in Morocco or if its place of effective management is in Morocco.
Dividends. Dividends paid to a nonresident are subject to a 15% withholding tax, unless the rate is reduced under an applicable tax treaty.
Interest. Interest paid on a loan from a nonresident is subject to a 10% withholding tax, unless the rate is reduced under a tax treaty. A loan granted for 10 years or more is exempt from withholding tax.
Royalties. Royalties paid to a nonresident are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty.
Transfer Pricing. Morocco has a general provision within its tax legislation requiring transactions between related parties to be at arm’s length.
Where a Moroccan company is directly or indirectly connected with enterprises situated inside or outside Morocco, profits transferred indirectly to such enterprises, by means of increases or decreases in buying or selling prices or by any other means, must be included among taxable profits on the tax return.
In order to determine the amount to be included among taxable profits, Moroccan tax authorities will make comparisons with other similar companies carrying on normal business activities or by means of direct assessment based on information available to the tax authorities.
CFC Rules. There are no provisions for CFCs in Morocco.
Hybrid Treatment. No.
Inheritance/estate tax. None.
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