Double Taxation Agreements with Kenya

Double taxation agreement (DTA) is a treaty between two countries that helps in resolving issues related to taxation. Double taxation is a situation where an individual or a company is taxed twice in two different countries on the same income or profits. To avoid such incidences, Kenya has entered into DTA agreements with other countries to resolve issues related to double taxation and prevent tax evasion.

Kenya`s DTA agreements are meant to promote cross-border trade and investment, boost economic growth, and prevent tax evasion. These agreements are binding and enforceable, and they help in eliminating uncertainties and conflicts related to taxation.

DTA agreements with Kenya mainly focus on income tax, capital gains tax, and withholding tax. Income tax is a tax on the income or profits earned by individuals or companies. Capital gains tax is levied on the profit made by individuals or companies when they sell an asset, such as shares, property, or a business. Withholding tax is a tax that is deducted at source when a non-resident earns income in Kenya.

Due to the DTA agreements, individuals and companies that are residents of Kenya can claim tax relief in the foreign countries they operate in. Similarly, non-residents earning income in Kenya can also claim tax relief under the DTA agreements.

Kenya has signed DTA agreements with over 20 countries, including the United States, the United Kingdom, China, France, Germany, and India. The DTA agreements with these countries have different provisions, and it is up to the individual or company to understand the specific provisions in each agreement.

For instance, the DTA between Kenya and the United States provides that US citizens and residents working in Kenya are only liable to pay taxes in the US, while Kenyan citizens and residents working in the US are only liable to pay taxes in Kenya. Similarly, the DTA between Kenya and the United Kingdom provides for tax relief for Kenyan residents with income from the UK and vice versa.

In conclusion, the DTA agreements signed by Kenya are crucial in promoting cross-border trade and investment, boosting economic growth, and preventing tax evasion. The agreements provide clear guidelines on how individuals and companies can avoid double taxation and claim tax relief. It is important for individuals and companies operating in Kenya to familiarize themselves with the specific provisions of the DTA agreements to avoid any tax-related issues.