A new tax treaty between Mauritius and Kenya was signed after the Kenyan High Court ruled last month that the 2012 tax treaty between the two countries are invalid following a lawsuit.
According to the Mauritius Prime Minister, Pravind Jugnauth, the Mauritius-Kenya Double Taxation Avoidance Agreement and the Investment Protection and Promotion Agreement, signed by the two countries, is crucial mechanisms in shaping investments.
The above mentioned lawsuit was brought on by Tax Justice Network Africa claiming that the Kenyan government did not follow ratification procedures required by law because the agreement was not properly laid before Parliament. In its suit, Tax Justice Network Africa also said that the earlier treaty was harmful to Kenya because it reduced the withholding tax on services, management fees, and insurance commissions to zero percent from its current rate of 20 percent and, moreover, because Kenya gave away its right to tax capital gains from stock sales of Kenyan companies to Mauritius, which does not charge any capital gains tax.
The new Kenya-Mauritius treaty has been signed by the two countries, whether the disputed provisions in the nullified tax treaty are included in the new treaty remains to be seen.
Please read the full article by Julie Martin HERE.
Source: MNE Tax