Mauritius and Kenya agree to the amendment of the Double Taxation Avoidance Agreement

Published On - 17 April 2020

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Mauritius and Kenya signed, on 16th October 2019, a Protocol for the amendment of the Double Taxation Avoidance Agreement (DTAA) treaty. Both Republics signed the DTAA back in April 2019, during the state visit of Uhuru Kenyatta, President of Kenya, to Mauritius.

Before the ratification of the Agreement, both countries decided to discuss the amendment of certain of its provisions to ensure it is compliant with BEPS requirements and in line with the tax treaty policies of Kenya and Mauritius.

During the Tokyo International Conference on African Development (TICAD) that took place in Japan in August, the President of Kenya and the Prime Minister of Mauritius agreed for the technical teams of both countries to meet and discuss the amendments that should be brought to the Agreement. In September, as a conclusion of successful negotiations, the teams brought forward the Protocol amending the DTAA between Mauritius and Kenya.

Benefits of the Mauritius – Kenya Double Taxation Avoidance Agreements (DTAAs)

The DTAA will:

  • ensure that income derived by investors do not suffer double taxation.
  • provide greater tax certainty for businesspeople of our two countries as it makes clear the taxing rights of Mauritius and Kenya on all forms of income arising from cross-border economic activities between the two countries.
  • will provide Mauritian and Kenyan tax authorities with an effective mechanism to fight tax evasion and other misdeeds.
  • allow investors to enjoy tax incentive. For example under the domestic law of Kenya:
    • dividends paid to foreign investors are subject to a withholding tax at the rate of 10%. With the DTAA the tax rate will now be 8%;
    • interest paid to foreign investors are subject to a withholding tax at the rate of 15% when paid by a financial institution and at the rates of 25% and 10%, respectively, on bearer certificates and bearer bonds. Under the DTAA the rate of tax is now set at 12.5% for all interest income;
    • royalties paid to foreign investors are subject to a withholding tax at the rate of 20%. Under the DTAA the new rate of tax is set at 12% for all interest income;
    • technical fees paid to foreign investors are subject to a withholding tax at the rate of 20%. Under the DTAA the rate of tax is now set at 10%.
  • The DTAA will bring the competitiveness of Kenyan companies at par with other African countries already having a DTAA with Mauritius.
  • The DTAA will offer Kenyan companies with fiscal certainty in their international business operations involving Mauritius.
  • Mauritian businesspersons and investors looking for opportunities in Kenya will benefit from this Agreement, as will the Kenyan businessmen and investors looking for opportunities in Mauritius.