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Key Points of Tax Convention with Morocco

[Provisional translation]

1. Taxation on Business Profits

Where an enterprise of one of the two countries has in the other country a permanent establishment (such as a branch, including the furnishing of services by an enterprise through personnel over a certain period of time) through which the enterprise carries on business, only the profits attributable to the permanent establishment may be taxed in that other country. 

2. Taxation on Investment Income

Taxation on investment income (dividends, interest and royalties) in the source country will be subjected to the reduced maximum rates or exempted as follows:

Dividends5%(holding at least 10% of: 
       where paid by a company of Japan, voting power;
       where paid by a company of Morocco, capital.)
10% (others)
InterestExempted(received by the Governments)

3. Taxation on Gains from Alienation of Shares

Gains from the alienation of shares of a company will be taxed in the source country subjected to the maximum rate at the 5 per cent if the alienator owned shares representing at least 50 per cent of the capital of that company. However, gains derived from changes of ownership that would directly result from a corporate reorganisation of that company or that alienator will be exempted from tax in the source country. 

4. Prevention of Abuse of the Convention

In order to prevent abuse of benefits under the Convention, any benefit under the Convention will not be granted if it is reasonable to conclude that obtaining such a benefit was one of the principal purposes of any transaction. 

5. Mutual Agreement Procedure

Taxation not in accordance with the provisions of the Convention may be resolved by mutual agreement between the tax authorities of the two countries. 

6. Exchange of Information and Assistance in Collection of Tax Claims

In order to effectively prevent international tax evasion and tax avoidance, the exchange of information concerning tax matters  and the mutual assistance in the collection of tax claims between the two countries are introduced.