Kenya has a dual tax evasion contract with the following countries: withholding tax paid abroad can only be invoked against Kenyan personal income tax if it is unilateral or bilateral relief. Kenya has only 11 bilateral tax treaties that allow direct tax compensation (and double taxation relief). This warning summarizes the main provisions of the DtA. one. The beneficiary is present in the other state for a period of up to 183 days, over a 12-month period, which ends or ends with the year in question. Expenses, including general administrative and supervisory expenses, borne by the EP inside or outside the country in which it is located, are deductible for the calculation of PE`s taxable profit. Under Mauritian national law, no withholding tax applies to interest paid to a non-resident who does not operate in Mauritius (a) from a Financial Services Act (FSA) company on his foreign source income; (b) by a bank holding a banking licence under the Banking Act, to the extent that interest is paid on the gross income of its banking operations with non-residents and companies holding a GBL under the FSA. Interest collected is also tax-exempt in a number of other cases, such as. B the interest rate for a non-resident person of a Mauritanian bank and interest on bonds and sukuks listed on the stock market of a non-resident company. The DBA is expected to come into force on January 1 of the year following the completion of the above measures. . The DBA applies to all persons residing in Kenya, Mauritius or both countries and applies to all taxes that are essentially similar to those of income tax. The DBA remains in force indefinitely, but any State party may terminate it by written denunciation of the other state by June 30 of a calendar year beginning five years after the year of the DBA`s effectiveness.
On 26 June 2020, following the repeal of the DBA, the Kenyan government created a subsequent DBA between Kenya and Mauritius. The DBA is very similar to the original DBA and provides for reduced withholding rates on dividends, interest and royalties. The DBA also addresses other relevant issues, including the exchange of information between the two countries and the procedures of the reciprocal agreement. If direct tax calculations are not possible, withholding tax (where income is taxable in Kenya) is deductible. The unilateral tax relief in Kenya is extended to Kenyan nationals for employment, sports and entertainment sites, which must be reported and taxed in Kenya. Income from real estate from a member state of a contracting state may be taxed in the contracting state where the property is located. For more information or explanations, please contact: In addition, an insurance company will set up an MOU if it collects premiums in the other contracting state or insures the risks associated with them by someone other than that of an independent agent. However, there is no question of an MOU when the insurance activity relates to reinsurance. B. Compensation is paid by or on behalf of an employer who has no domicile in the other state. KRA Headquaters, Times Tower, Haile Selassie Avenue, Nairobi Kenyan taxpayers should consider limiting the benefit rules under the Income Tax Act when determining the applicability of the various benefits of the DBA.
The definition of a stable institution (MOU) is largely based on the OECD`s model tax treaty on income and capital. A PE would include a fixed business location, including a building or construction site, that has been in existence for more than 12 months.