The double taxation agreement (DTA) between Kenya and Mauritius, signed on 7 May 2012, has now been ratified and will come into force with effect from 1 January 2015. This is expected to increase investment in Kenya through Mauritian companies as such entities would benefit from establishment in a low tax jurisdiction coupled with a favourable tax treatment in relation to certain payments made from Kenya.
A summary of the preferential treatment in relation to withholding tax is as follows –
|Rate under DTA
|Non-resident rate in Kenya
|5% (if the beneficial owner is a company holding directly at least 10% of the shares)
With respect to individuals, income in relation to directors’ fees and remuneration of top-level managerial officials is to be taxed at the respective rate in the country where the income is derived from. Additionally, professors and teachers on a temporary visit (for a period not exceeding two years) for the purpose of teaching / research in the public interest will be exempt from tax on income derived from outside the state and will only be taxed on income from the state that he / she is in during the particular period.