The Kenyan government on January 17, concluded receiving comments from Kenyans as regards the plans to establish a Double Tax Agreement (DTA) with Jordan.
In the process being spearheaded by the National Treasury, Kenya is now preparing a final draft to eliminate double taxation with respect to income tax.
Once completed, Jordan nationals with businesses in Kenya will be exempted from paying income tax as they would have already paid in their home country.
Kenyan nationals who have entrepreneurial ventures in Jordan will be extended the same courtesy, as part of the DTA.
“Double taxation is a tax principle referring to income taxes paid twice on the same source of income,” the Treasury explained.
Double taxation can happen at both corporate and individual levels or in international trade where the same income is taxed in two different countries, in this case, Kenya and Jordan.
According to the National Treasury, Kenya does not usually pursue ending double taxation at corporate and individual levels but at the international level.
DTA is borne out of the presumption that double taxation is an unintended consequence of tax legislation.
“It is generally seen as a negative element of a tax system, and tax authorities attempt to avoid it whenever possible,” the National Treasury states.
Existing DTAs Between Kenya and Other Nations
Kenya has eradicated Double Taxation with some of the world’s leading economies including Canada, Denmark, France, Norway and Germany.
Other countries that Kenya has a DTA with are Iran, South Korea, Qatar, Seychelles and South Africa.
Unenforced Signed DTAs
The National Treasury has signed DTAs with China, Italy, Kuwait and Mauritius but there has been no agreed date on when they will come into force.
Concluded DTAs Awaiting Signing
In total, Kenya has Double Taxation Agreements with 5 countries which have been concluded but awaiting signing by respective countries.
The countries with concluded but unsigned DTAs with Kenya are; Botswana, Nigeria, Portugal, Saudi Arabia and Singapore.
DTAs Under Consideration
While Kenya has enacted DTAs with many leading world economies, there are not enough of such agreements with African countries.
This could change in the near future as Kenya is considering signing DTAs with 9 African countries including Algeria, Cameroon, the Democratic Republic of Congo and Ethiopia.
Other countries in consideration are Ghana, Ivory Coast, Malawi, Senegal and South Sudan.
Non-African countries that have DTAs under consideration are Belgium, Macedonia, Malaysia and Russia.
