Expenses, including general administrative and supervisory expenses, borne by the EP inside or outside the country in which it is located, are deductible for the calculation of PE`s taxable profit. That`s why Kenya has signed DBA with several countries. Some of these countries are India, Singapore, the United Arab Emirates, the Netherlands, Japan, China and Russia. In addition, Kenya has signed the DBA with Mauritius, Norway, South Africa, Sweden, the United Kingdom, Zambia, Qatar and Italy. This means that the same type of income and profits is taxed twice. If the same income is taxed twice, it is called double taxation. International investors are looking for investment factors of their own and countries are proposing specific factors of their own. Reduced withholding rates only apply if the recipient is the recipient of the income. However, payments made by PE to its head office or to one of its other headquarters for licensing fees, commissions, administrative fees or interest are non-deductible expenses, unless they relate to an effective reimbursement of fees. This requires the signing of the DBA so that Kenyan residents can benefit from it and the government can also benefit from a share of the taxes that should have been paid in other countries. The DBA provides for reduced withholding rates, as shown below: 7) Mauritius (possibly as of January 1, 2017). The agreements set out specific rules for the different types of taxes that can be levied on the different types of income and profits of the two countries for the regular activities of the DBA.
Some of these contracts provide preferential withholding rates. However, in most cases, the standard tax rates mentioned above apply. In most cases, the contracts will allow the withholding of the withholding tax on the tax debt in the countries concerned to be attributed. Agreements have been concluded with East African partner countries Kuwait, Iran, Mauritius and the Vae, but have not been ratified. There is no withholding tax if the royalty is paid by a company from the foreign income of the Mauritian company. All other eligible payments will increase withholding tax at the usual withholding rates at source The High Court of Kenya cancelled a Double Taxation Avoidance Agreement (DBA) between Kenya and Mauritius in March 2019.