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Tax Treaty between Benin and Morocco has Entered into Force — Orbitax Tax News & Alerts

The income tax treaty between Benin and Morocco entered into force on 28 November 2022. The treaty, signed 25 March 2019, is the first of its kind between the two countries.

Taxes Covered

The treaty covers the personal and corporate income taxes of both countries.

Limited Force of Attraction Provision

Article 7 (Business Profits) includes a limited force of attraction provision whereby taxing rights are granted to a Contracting State on profits attributable to the sale of goods or merchandise or other business activities carried on in that Contracting State by a resident of the other State if the same or similar goods or merchandise or business activities are also sold or carried on by a PE maintained by that resident in the first-mentioned Contracting State.

Withholding Tax Rates

  • Dividends - 5%
  • Interest - 10%
  • Royalties - 10%

Note, the definition of royalties includes payments for technical assistance and services other than those referred to in Articles 14 and 15 regarding independent and dependent professionals.

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State;
  • Gains from the alienation of shares in a company, the property of which consists directly or indirectly principally of immovable property situated in the other State; and
  • Gains from the alienation of shares that represent a participation of at least 30% in the capital of a company resident in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Entitlement to Benefits

Article 29 (Entitlement to Benefits) provides that a benefit under the treaty shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty.

Effective Date

The treaty applies from 1 January 2023.