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Treasury seeks comments on double taxation treaties with Singapore, Barbados

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By Steve Umidha

The National Treasury has issued a general notice requesting public comments on the pending income tax treaties with Barbados and Singapore, which were signed on December 7, 2019 and 12 June 2018, respectively.

The notice dated July 13, Treasury CS Ukur Yatani asked those submitting such comments to do so in writing by August 17, if they are to be considered – with the comments, also known as public participation, hoped to ensure income earned in any of the three countries is not subject to double taxation.

“The Government of Kenya wishes to enter into respective Agreements for the Avoidance of Double Taxation with respect to taxes on income (DTA) with the Government of the Republic of Singapore and the Government of Barbados. The National Treasury and Planning is spearheading the process on behalf of the Government of Kenya,” said CS Yatani in a statement.

The taxation treaty between the Kenyan government and the two nations will be applicable on income tax and corporate tax.

The current corporate tax rate applicable in Kenya is 30 per cent in the case of resident corporations such as limited liability companies – while a non-resident company with a permanent establishment in Kenya is taxed at 37.5 per cent.

An expatriate, who is resident in Kenya is liable to pay income tax – often charged at 30 per cent. An expatriate, who is not resident in Kenya, but who is employed by a person who is resident in Kenya or by a permanent establishment of a nonresident is also liable to income tax.

This brings to over 22 the number of countries Kenya has signed avoidance of double taxation agreements (DTAs) whose aim is to ensure efficient administration of tax as well as promote investments in both countries.

Other reasons why countries also enter into a treaty include eliminating tax evasion and illicit financial flows, which is meant to improve certainty for taxpayers and tax authorities in their international dealings.

Kenya has previously been urged to relook at some of the existing bilateral tax treaties it signed with foreign countries if it stands a better chance of repatriating some of the black money believed to be stashed abroad.

Maarten Hietland, a researcher and lecturer on corporate tax avoidance by multinational corporations in a previous interview with this writer challenged the country’s leadership to enter into Double Taxation Avoidance Agreements (DTAA) with tax havens in order to crack down on tax evaders, prevent money laundering as well as other tax-related offences.

“In order to adjust the level of taxation, there has to be a basis or reference to national law and treaties are about relieving, not imposing tax,” he said.

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