Technical Explanation to the 1977 Exchange of Notes (1981)

TECHNICAL EXPLANATION TO THE 1977 EXCHANGE OF NOTES (1981)

A note accompanying the Convention and signed at the same time expresses the concern of the Moroccan Government at the absence in the Convention of a “tax sparing” credit by the United States and an agreement by the United States to resume discussions on this point if the Senate approves such a provision for another country

An exchange of notes signed on October 25, 1979 by Mr. Alaoui Medaghri, Director of the Tax Division of the Ministry of Finance of Morocco and Mr. Donald Lubick, then Assistant Secretary for Tax Policy of the U.S. Treasury clarifies the treatment of interest paid on Moroccan equipment bonds under Article 21(2) and states that solutions to claims of double taxation reached under the mutual agreement procedure in accordance with Article 25(1) will be implemented notwithstanding statutory time limits.

A note signed on April 17, 1981 by Mr. Alaoui Medaghri, Director of the Tax Division of the Ministry of Finance of Morocco and Mr. John Redecker, then Economic Counselor of the U.S. Embassy at Rabat, Morocco, explains that the Moroccan branch profits tax applicable to profits of Moroccan branches of U.S. companies is subject to the ten percent limitation provided in Article 10(2)(b) with respect to parent-subsidiary dividends.