Key takeaways: Morocco has signed over 60 tax treaties, including about fifteen with African countries, positioning the Kingdom as a regional tax hub. These treaties reduce withholding tax rates on dividends (typically 8 to 10%), interest (10%), and royalties (5 to 10%). Applying reduced rates requires a tax residence certificate issued by the DGI and compliance with specific procedures. The BEPS/MLI framework is progressively impacting these treaties.
Morocco’s Treaty Strategy in Africa
Morocco as a Continental Tax Hub
Since the 2000s, Morocco has significantly expanded its treaty network in sub-Saharan Africa, consistent with its strategy of positioning itself as an investment platform for the continent. This policy rests on several pillars:
- Over 60 tax treaties signed in total, including about fifteen with African countries
- CFC status (Casablanca Finance City) offering an attractive tax regime for regional headquarters
- Bilateral investment protection agreements (BITs) complementing the treaty framework
- Morocco’s adherence to the BEPS Inclusive Framework of the OECD, strengthening the network’s credibility
Moroccan tax treaties generally follow the OECD Model, with adaptations linked to the specific characteristics of African economies (importance of mining royalties, technical services, etc.).
Objectives of Morocco-Africa Treaties
Bilateral treaties pursue three main objectives:
- Eliminate double taxation on cross-border income (dividends, interest, royalties, business profits)
- Reduce withholding tax rates compared to domestic law rates
- Prevent tax evasion through information exchange and non-discrimination clauses
Morocco-Africa Treaty Table: Withholding Tax Rates
The table below summarizes the treaty withholding tax (WHT) rates applicable to the main passive income flows between Morocco and its African partners. These rates should be compared with Moroccan domestic law rates: 11.25% on dividends in 2026 (10% from 2027), 10% on interest, and 10% on royalties.
| Country | Dividends | Interest | Royalties | Status |
|---|---|---|---|---|
| Senegal | 10% | 10% | 10% | In force |
| Ivory Coast | 10% | 10% | 10% | In force |
| Gabon | 15% | 10% | 10% | In force |
| Cameroon | 12.5% | 12.5% | 12.5% | In force |
| DRC | 10% | 10% | 10% | In force |
| Tunisia | 10% | 10% | 5% | In force |
| Egypt | 10% | 10% | 10% | In force |
| Mali | 10% | 10% | 10% | In force |
| Guinea | 10% | 10% | 10% | In force |
| Burkina Faso | 10% | 10% | 10% | In force |
| Niger | 10% | 10% | 5% | In force |
| Chad | 15% | 15% | 15% | In force |
| Congo (Brazzaville) | 15% | 12.5% | 10% | In force |
| Mauritania | 10% | 10% | 5% | In force |
| Madagascar | 10% | 10% | 10% | In force |
Note: These rates represent the maximum rates provided by the treaties. Reduced rates may apply in specific cases (qualifying participations, government loans, etc.). Always verify the applicable treaty text.
Focus on the Most Used Treaties
Morocco-Senegal Treaty
The Morocco-Senegal tax treaty is one of the most frequently invoked by Moroccan businesses, due to the significant Moroccan investments in Senegal (banking, telecoms, construction, real estate).
Key points:
- Dividends: Treaty rate of 10% (vs 10% under Senegalese domestic law). A reduced rate of 8% may apply if the participation is 25% or more
- Interest: Cap of 10%. Exemption for interest paid to the State or the Central Bank
- Royalties: 10%, including royalties for technical assistance
- Business profits: Taxable only in the state of residence, unless there is a permanent establishment in Senegal
- Technical services: Note that Senegal often applies withholding on technical services, even absent a permanent establishment. The treaty may limit this right
Practical procedure: The Moroccan company must provide the Senegalese payer with a tax residence certificate issued by the Moroccan DGI, accompanied by the treaty form, before payment to benefit from the reduced rate.
Morocco-Ivory Coast Treaty
The Morocco-Ivory Coast economic partnership is particularly dynamic, with a strong presence of Moroccan banking and real estate groups in Abidjan.
Specificities:
- Dividends: 10% with possibility of reduction to 8% for substantial participations (25% or more)
- Interest: 10%. Banking interest is common in bilateral flows
- Royalties: 10%, including for trademarks and patents
- Technical services: Ivory Coast generally levies WHT on technical services. The treaty limits this practice to the royalty rate
- Permanent establishment: The definition includes a construction site lasting more than 6 months (vs 12 months in the standard OECD model)
Morocco-Tunisia Treaty
The Morocco-Tunisia treaty benefits from the proximity of the two countries’ tax systems (both inspired by the French model) and features some of the most favorable rates in the African network.
Specificities:
- Royalties: Reduced rate of 5%, one of the lowest in the Moroccan treaty network
- Dividends: 10%, with a most-favored-nation clause
- Interest: 10%, exemption for inter-State interest
- CGI similarities: Both countries share similar concepts (tax residence, permanent establishment, deductible expenses), facilitating treaty application
Practical Procedure to Apply a Reduced Treaty Rate
Step 1: Obtain the Tax Residence Certificate
The Moroccan company must request from the DGI (General Tax Directorate) a tax residence certificate confirming that it is a resident of Morocco within the meaning of the applicable treaty. This request is made via the SIMPL portal or directly at the competent tax office.
Required documents:
- Written request mentioning the partner country and the treaty invoked
- Copy of the tax identification number (IF)
- Copy of the latest corporate tax return filed
- Copy of the trade register certificate
Timeline: Generally 5 to 10 business days.
Step 2: Transmit the Certificate to the Foreign Payer
The certificate must be transmitted to the payer (the African company) before payment of the relevant income. The foreign payer will use it to apply the reduced treaty rate rather than the domestic law rate.
Step 3: Declare Income in Morocco
African-source income received by the Moroccan company must be declared in the IS tax return. Withholding tax levied abroad gives rise to a tax credit that can be offset against Moroccan IS, up to the amount of Moroccan IS corresponding to that income.
Step 4: Retain Documentation
The company must retain for 10 years (tax statute of limitations in Morocco):
- The tax residence certificate
- Evidence of foreign WHT payment
- Corresponding tax returns
- Underlying contracts
Case Studies
Case 1: Moroccan Company Invoicing Services to Senegal
Situation: Upsilon Maroc SARL invoices 500,000 DH excluding tax for tax consulting services to a Senegalese company.
Without treaty: Senegal would apply a WHT of 20% on foreign service payments, i.e., 100,000 DH withheld.
With treaty: The treaty rate for royalties/technical services is 10%, i.e., 50,000 DH withheld. Savings: 50,000 DH.
In Morocco: The 500,000 DH is included in taxable income. The 50,000 DH Senegalese WHT is credited against Moroccan IS. If the Moroccan IS on this income is 155,000 DH (at 31%), the tax credit of 50,000 DH reduces the net IS to 105,000 DH.
Case 2: Dividends from Ivory Coast to Morocco
Situation: A Moroccan holding company owns 60% of an Ivorian subsidiary that distributes 2,000,000 DH in dividends.
WHT in Ivory Coast: Treaty rate of 8% (participation of 25% or more), i.e., 160,000 DH withheld in Abidjan.
In Morocco: The dividends benefit from the 100% exemption (participation > 5%, holding > 1 year). The tax credit of 160,000 DH can be offset against the holding’s overall Moroccan IS.
For more on holding structures, see our guide on holding companies in Morocco.
Mutual Agreement Procedure (MAP) in Case of Double Taxation
Principle
When a taxpayer considers that the measures taken by one or both states result in taxation inconsistent with the treaty, they may initiate a Mutual Agreement Procedure (MAP) provided for by most treaties.
Procedure in Morocco
- Filing: The taxpayer submits a written request to the DGI (Directorate of Legislation, Studies, and International Cooperation) within 3 years from the first notification of taxation contrary to the treaty
- Review: The DGI examines the request and, if it deems it well-founded, initiates negotiations with the competent authority of the other state
- Resolution: The authorities attempt to reach an amicable agreement within 2 years (variable depending on the treaty)
- Implementation: The agreement is implemented through tax relief or refund
MAP Limitations in Africa
In practice, the mutual agreement procedure with African countries remains slower and more complex than with European partners, due to:
- Limited administrative capacity of certain African tax administrations
- Absence of mandatory arbitration mechanisms in most Morocco-Africa treaties
- Actual timelines that may exceed 3 years
Impact of the BEPS/MLI Framework on African Treaties
The Multilateral Instrument (MLI)
Morocco signed the Multilateral Instrument (MLI) of the OECD in 2019, which automatically modifies covered bilateral tax treaties. Key modifications include:
- General anti-abuse clause (Principal Purpose Test - PPT): A treaty cannot be invoked if one of the principal purposes of the arrangement is to obtain treaty benefits
- Permanent establishment: Expanded definition to cover commissionnaires and dependent agents
- Improved mutual agreement procedure: Stricter deadlines for dispute resolution
Impact on Morocco-Africa Treaties
Several African countries have also signed the MLI (Senegal, Ivory Coast, Cameroon, Tunisia, Egypt, Burkina Faso). For treaties covered by the MLI on both sides:
- The PPT applies: Arrangements whose principal purpose is to obtain treaty benefits may be denied
- A limitation on benefits (LOB) clause may apply in certain cases
- Transfer pricing receives heightened attention (cf. BEPS Action 13: Country-by-Country Reporting)
For Moroccan companies investing in Africa, it is essential to document the economic substance and commercial reality of operations to secure treaty application. See our guides on transfer pricing in Morocco and Morocco’s tax treaties for more details.
Practical Recommendations for Businesses
- Verify the existence and status of the treaty before any cross-border transaction
- Obtain the tax residence certificate in advance of payment
- Document the economic substance of each group entity
- Retain foreign WHT evidence for at least 10 years
- Anticipate the PPT: Ensure operations have a commercial justification beyond the tax benefit
- Consult an expert for complex operations involving multiple African jurisdictions
The Morocco-Africa treaty network constitutes a major competitive advantage for Moroccan companies investing on the continent. Its effective use, however, requires thorough knowledge of the applicable texts and procedures. For personalized support on your investment in Morocco and African projects, do not hesitate to contact us.
