Emerging Markets Rates and Currencies Handbook

170 Citi | Emerging Markets Currencies Handbook 2021 Morocco Trade flows FX trades related to local resident entities must be backed by commercial/financial transactions. Underlying documents are required for imports of goods and services. With regards to hedging: in addition to an FX Master agreement (for longer than 1Y, an ISDA will be required), supporting documents to be provided to the bank on deal booking date for FX forwards (contracts, import documents, export declarations, final invoices or purchase orders from foreign customers). Capital flows/FDI Investment flows for local resident entities must be converted in LCY upon receipt and must be registered with the Moroccan Exchange Office. Capital injections/ dividend payments/FDIs cannot be hedged onshore at the moment, but hedging of these flows could be allowed in a near future. Intercompany loan hedging is allowed. Citibank Maghreb S.A. Zenith Millenium Lotissement Attaoufik, Immeuble 1, Sidi Maarouf Casablanca 20190 FX Sales Contact: +2125 2248 9657 Item Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equity W/H Tax 10% WHT Under certain tax treaties can be reduced Interest on foreign currency loans with maturity > 10 years is WHT exempt Interest income from tax residents (other than FIs) is subject to 20% WHT. The WHT is deductible. Interest on foreign currency loans with maturity > 10 years is WHT exempt N/A 15% WHT on dividends • Under certain tax treaties can be reduced • WHT on dividends exemption if distributed offshore for entities established in free trade zones (FTZ) to activities performed in FTZ Deductibility of interests No specific thin cap rules Interest on loans from direct shareholders is tax deductible if capital is fully paid in Deductible interest limited to (i) portion of loan not exceeding share capital equity and (ii) official interest rate provided annually by the Ministry of Finance based on six months treasury bills (2.22% in 2018) Transfer pricing rules apply (i.e. arms length rule) No specific thin cap rules N/A N/A N/A Deductibility of FX losses Generally tax deductible N/A N/A Other taxes, duties N/A N/A N/A N/A N/A Comments N/A N/A N/A N/A N/A Note: Citigroup Inc. and any of its affiliates do not provide accounting, tax, or legal advice. Please seek advice from a relevant licensed advisor. Source: Relevant legislation, publicly available sources. Subsidiary Funding — Tax Consideration Tax Summary — Morocco