Albania | February 2016 |
Albania and the Kingdom of Morocco preliminarily agreed on the need for a Double Tax Treaty back in 2012 when treaty negotiations commenced. The willingness to conclude such an agreement was reiterated in October of 2014 during Albanian parliamentary officials’ visit to Morocco. The treaty was finally signed during the visit of the Albanian Minister of Foreign Affairs in Morocco in October 2015. The scope of the agreement, which will enter into force following Albania’s pending ratification, is to prevent fiscal evasion and avoid double taxation, especially on income tax.
Both countries are members of the OECD Convention on Mutual Administrative Assistance in Tax Matters and the treaty concluded closely follows the OECD model. The treaty deems a permanent establishment to include a construction or installation site or project (or supervision of such a site / project) in duration exceeding six months as well as the provision of services (including consulting) that lasts for an aggregate period exceeding one month in a 12 month period.
As far as withholding taxes are concerned, the agreement defines a withholding tax rate of 10% on dividend payments as well as on royalties and interests.
Following the signing of the treaty in October 2015, the Moroccan Government approved the treaty on December 16th, 2015 while the Council of Ministers approved it on February 6th, 2016. Albania’s ratification is still pending.
The Double Tax Agreement between Albania and Morocco is seen as a progressive and very important step, for exploring opportunities of cooperation, and strengthening bilateral relations. The Agreement will help both countries intensify their bilateral relations as well as lead to improved economic cooperation, particularly in trade, agriculture and tourism.