Kenya has concluded double taxation treaties with the following countries: withholding tax paid abroad can only be invoked against Kenyan income tax if there is a unilateral or bilateral relief scheme. Kenya has only eleven bilateral tax treaties allowing for direct tax compensation (and double taxation exemption). 7) Mauritius (possibly from 1 January 2017). The contract provides that a permanent establishment is considered to be established when an enterprise provides services within a Contracting State by employees or other personnel employed for the same or related project, for a period or period exceeding 183 days in a twelve-month period. Where direct tax compensation is not possible, withholding tax paid abroad (if the income is taxable in Kenya) is deductible as an expense. The unilateral exemption from foreign taxes in Kenya is extended to Kenyan nationals in terms of employment, sports and entertainment income that must be declared and taxed in Kenya. Some of these agreements provide for preferential rates for withholding tax. However, in most cases, the above-mentioned normal tax rates apply. In most cases, the agreements will allow the withholding tax to be set off against the tax debt in the countries concerned.
Agreements have been concluded with East African partner countries Kuwait, Iran, Mauritius and the United Arab Emirates, but have not been ratified. The agreement covers Kenyan income tax and South African normal tax, secondary business tax, withholding tax on royalties and tax on foreign artists and sportsmen. All other qualifying payments are debited from a withholding tax at the usual withholding tax rates. . . .