Japan and Morocco sign tax treaty

The governments of Japan and Morocco on January 8 signed a tax treaty in Rabat, Morocco, Japan’s Ministry of Foreign Affairs has announced.

The treaty, which is not yet in force, would reduce withholding tax on dividend payments to five percent for companies holding at least 5 percent of the shares of the payer and would reduce withholding tax to 10 percent in other cases.

Withholding tax on interest payments would be exempt if beneficially owned by the government and is 10 percent in other cases. Withholding tax on royalties for equipment is set at 5 percent and is 10 percent in other cases.

Under the Japan-Morocco tax treaty, gains from the alienation of shares representing at least 50 percent of the capital of a company would be taxed in the source country at the maximum rate of 5 percent. Gains from corporate reorganization ownership changes would be exempt from tax.

The treaty contains modern provisions designed to curtail tax treaty shopping and introduces exchange of information and assistance in the collection of tax claims between the two countries.