Kenya and South Africa tax deal takes effect in January
The Kenya-South Africa double taxation agreement comes into force from January 1.
An announcement in the November 19, South African government gazette says the agreement applies for taxes withheld at source.
“A resident of Kenya will not be taxed on any South African business profits, unless it carries on business through a South African permanent establishment,” reads part of the notice, posted on the Ernst and Young website.
Similar treatment will be applied to a South African doing business in Kenya and making profits.
The announcement comes just two months after the two countries resolved a visa hitch, where Kenyan travellers will be required to pay Sh4,700 for Visa application, down from Sh6,800.
So far, the government has concluded double taxation agreements with Zambia, Norway, Denmark, Sweden, United Kingdom, Germany, Canada and India. Tanzania, Italy and Uganda’s agreements have been signed but ratification is yet to be done by all contracting states.
Other countries whose DTAs are under discussion by the taskforce for double taxation are only seven including Seychelles, Nigeria, Mauritius and Finland. Others are Russia, United Arab Emirates and Islamic Republic of Iran.
The agreements help in alleviating double taxation where business is conducted in different tax jurisdictions and also assist tax administrations in preventing fiscal evasion.
The treaty was expected to come into force at the start of this year after it was signed in 2010, but the Kenya government did not complete in time the notification process that was required, thus postponing the agreement by a year.