On October 17, 2019, Kenya signed afresh a double taxation treaty with Mauritius following the nullification of a 2012 treaty by the courts. This followed a petition by the Tax Justice Network-Africa.
The government views such treaties as an avenue to enhance ties with bilateral partners.
The Treasury is now pursuing double taxation treaties with Singapore and Barbados. This pursuit is already facing resistance from the group that previously scuttled the treaty with Mauritius.
Tax Justice Network Africa argues that such agreements threaten to erode Kenya’s tax revenue mobilising capacity at a time when the economy can ill afford to forego such revenue owing to its constrained fiscal space.
“Tax treaties have often been used as tools of aggressive tax planning and subsequently contributing to tax avoidance”, it argues.
However, in July 2020, Kenya ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting which, in principle, should help mitigate the risks of abuse of such treaties.
While there is little, if any, data to indicate the trade flows between Kenya and Barbados, Kenya’s exports to Singapore in 2019 were Sh1.96 billion while imports were valued at Sh6.89 billion.
In this edition, NTV Business Editor Julians Amboko discusses double taxation treaties with Alvin Mosioma of Tax Justice Network Africa and Christine Kahema of Alpha Tax and Business Advisory Services.