Kenya has finally enacted a double taxation avoidance agreement that was first agreed upon with Mauritius in May 2012.  It is hoped that this will boost cross border investment by protecting investors from both direct and indirect double taxation.

It is also anticipated that this will increase the competitiveness of Kenyan companies to bring them on par with other African countries that already have existing tax treaties with Mauritius.  Mauritius also already has attractive tax treaties with countries such as India and China and it is hoped that this new treaty will encourage investment into Kenya via such countries.

The treaty allows firms registered in the two countries to pay taxes only in one.   This is of particular interest to companies registered in Mauritius who are seeking to invest as they not only avoid double taxation, but can benefit from Mauritius’s lower taxes.

This also means that;

– Mauritian companies that own at least a tenth of a Kenyan firm will only have to pay withholding tax on dividends of 5% instead of 10%
– Withholding tax on interest of 10% rather than 15%
– Tax on Royalties of 10% rather than 20%

This agreement will apply to payments after January 2015.