Kenya intends to strike an agreement with Ireland to eliminate double taxation on income or gains generated in one country and paid to citizens of the other.
The new agreement, which must be ratified by both the Irish and Kenyan parliaments, is intended to establish a favorable climate for investments, trade in products, and services between the two nations by reducing uncertainty generated by the presence of two separate jurisdictions.
Before Kenya signs the agreement, the National Treasury invited Kenyans for their feedback this week.
“This Agreement shall apply to income and capital gains taxes imposed by each signatory state, regardless of the method in which they are collected,” the agreement states.
“Profits of a contracting state’s enterprise must be taxed solely in that State unless the enterprise does business in the other state through a permanent establishment located therein.”
Manufacturing metals, office machinery, cereals, and drinks are among Ireland’s main exports to Kenya. Coffee, tea, fruits, and vegetables are among the most important Kenyan imports into Ireland.
Since the reopening of the Ireland Embassy in Nairobi in 2014, the value of trade in services between Ireland and Kenya has increased by more than 20% each year, reaching more than $160 million per year.
In 2019, more than 40 Irish firms signed Sh4.8 billion in investment partnerships with Kenyan peers.
Kenya has expanded the number of double-taxation treaties it has signed with important trading partners, signaling its determination to improve the flow of investment.
Parties who benefit from these transactions are shielded from double taxation, which is one of the factors that contribute to a country’s poor investment interest.
New DTTs have been signed with important trading partners like as the East African Community and the United Arab Emirates (UAE).
Double taxation results in considerable revenue loss for both individuals and companies, which also face the problem of bearing greater personnel costs as a result of the higher taxes expatriate labor is required to pay.
Kenya has double tax treaties with a number of countries, including the United Kingdom, Canada, Denmark, Norway, India, Sweden, Zambia, and Germany.