The Double Taxation Relief (Taxes on Income) (Morocco) Order 1991

Made: 19th December 1991

At the Court at Buckingham Palace, the 19th day of December 1991 Present, The Queen’s Most Excellent Majesty in Council

Now, therefore, Her Majesty, in exercise of the powers conferred upon Her by section 788 of the said Income and Corporation Taxes Act 1988, and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:—

1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (Morocco) Order 1991.

2

It is hereby declared—

• (a) that the arrangements specified in the Convention set out in the Schedule to this Order have been made with the Government of the Kingdom of Morocco with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of Morocco;

• (b) that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of Morocco concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasion with respect to those taxes; and

• (c) that it is expedient that those arrangements should have effect.

SCHEDULE — CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KING-DOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE KINGDOM OF MOROCCO FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of Morocco;

Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains;

Have agreed as follows:

ARTICLE 1 — Personal scope

This Convention shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2 — Taxes covered

ARTICLE 3 — General definitions

ARTICLE 4 — Fiscal residence

ARTICLE 5 — Permanent establishment

ARTICLE 6 — Income from immovable property

ARTICLE 7 — Business profits

ARTICLE 8 — Shipping and air transport

Profits which an enterprise of one of the Contracting States derives from the operation of ships or aircraft in international traffic shall be taxable only in that State.

ARTICLE 9 — Associated enterprises

Where:

• (a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or

• (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State;

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

ARTICLE 10 — Dividends

ARTICLE 11 — Interest

ARTICLE 12 — Royalties

ARTICLE 13 — Capital gains

ARTICLE 14 — Independent personal services

ARTICLE 15 — Dependent personal services

ARTICLE 16 — Directors' fees

Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors, supervisory board or similar body of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17 — Artistes and athletes

ARTICLE 18 — Pensions and annuities

ARTICLE 19 — Governmental remuneration and pensions

ARTICLE 20 — Students, apprentices and trainees

ARTICLE 21 — Income not expressly mentioned

Items of income of a resident of a Contracting State who is subject to tax there in respect thereof, being income of a class or from sources not expressly mentioned in the foregoing Articles of this Convention shall, if the right or holding from which the income arises is not effectively connected with a permanent establishment in the other Contracting State, be taxable only in the first-mentioned State.

ARTICLE 22 — Elimination of double taxation

ARTICLE 23 — Non-discrimination

ARTICLE 24 — Mutual agreement procedure

ARTICLE 25 — Exchange of information

ARTICLE 26 — Diplomatic and consular officials

ARTICLE 27 — Entry into force

ARTICLE 28 — Termination

This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Convention, through the diplomatic channel, by giving notice of termination on or before 30th June in any calendar year. In such event, the Convention shall cease to have effect:

• (a) in Morocco:

• (i) in respect of taxes withheld at source on income paid or credited, from 1st January in the calendar year next following that in which the notice is given;

• (ii) in respect of other taxes on income, for taxable periods beginning on or after 1st January in the calendar year next following that in which the notice is given;

• (b) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1st April in the calendar year next following that in which the notice is given.

In witness whereof the undersigned, duly authorised thereto by their respective Governments, have signed this Convention.

Done in duplicate at London, this eighth day of September, 1981 AD, corresponding to 9 Al Qida 1400H in the English and Arabic languages, each text being equally authoritative.

Signed

G. I. de Deney — Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

Under the Convention with Morocco scheduled to this Order shipping and air transport profits (Article 8), certain trading profits not arising through a permanent establishment (Article 7), non-governmental pensions (Article 18) and the earnings of temporary business visitors (Articles 14 and 15) are, subject to certain conditions, to be taxed only in the country of the taxpayer’s residence. Where an enterprise which is a resident of one country carries on business through a permanent establishment in the other, the profits of the enterprise which are attributable to that permanent establishment may be taxed in that other country (Articles 5 and 7).

Income derived by public entertainers from their personal activities may normally be taxed in the country in which those activities are exercised (Article 17). Governmental remuneration and pensions are normally to be taxed by the paying Government only (Article 19). Certain payments made to visiting students, apprentices and trainees are, subject to certain conditions, to be exempt in the country visited (Article 20).

Income from immovable property (Article 6) and capital gains (Article 13) arising from the disposal of such property or from shares in a company whose assets consist mainly of such property may be taxed in the country in which the property is situated. Capital gains arising from the disposal of movable property are normally to be taxed only in the country of the taxpayer’s residence unless they arise from the disposal of assets of a permanent establishment or a fixed base which the taxpayer has in the other country (Article 13).

Where income continues to be taxable in both countries relief from double taxation is to be given by the country of the taxpayer’s residence. The credit to be given in the United Kingdom for tax payable in Morocco is to include credit for tax spared under certain provisions of Moroccan law (Article 22).

Dividends paid by a United Kingdom company to a resident of Morocco are to be exempt from any tax in the United Kingdom which is chargeable on dividends. (Under the imputation system of company taxation in the United Kingdom there is no tax withheld from dividends). Where dividends are paid by a Moroccan company to a resident of the United Kingdom the tax charged in Morocco is not to exceed 10 per cent where the dividends are paid to a company which controls at least 10 per cent of the capital of the company paying the dividend and 25 per cent in all other cases (Article 10).

The rate of tax to be imposed by the country of source on interest paid to a resident of the other country is, in general, not to exceed 10 per cent. Interest received by or on behalf of a Contracting State is to be exempt from tax in the country of source (Article 11).

The rate of tax in the country of source on royalties (including management, technical or consultancy fees) paid to a resident of the other country is not to exceed 10 per cent (Article 12).

There are also provisions for safeguarding residents of one country from discriminat-ory taxation in the other country (Article 23) and for the exchange of information and consultation between the competent authorities of the two countries (Articles 24 and 25).

The Convention takes effect in the United Kingdom for years of assessment beginning on or after 6th April 1981 and financial years beginning on or after 1st April 1981 (Article 27).

Footnotes

[^f00001]: 1988 c. 1; section 788 is extended by section 10 of the Capital Gains Tax Act 1979 (c. 14).

[^f00002]: Instruments of ratification were exchanged on 29th October 1990.