TRICK OR TREAT(Y) ? Kenya’s Tax Treaty giveaways to Tax Havens
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TRICK OR TREAT(Y) ? Kenya’s Tax Treaty giveaways to Tax Havens

Kenya’s Tax Treaty giveaways to Tax Havens authored by Jared Maranga of Tax Justice Network Africa

DTA analysis

Most developing countries have been signing a number Double Tax Agreements even when the existing domestic laws are sufficient. The argument behind the increased signing is that DTAs will help in promoting investment and international trade. CSOs have questioned this logic following the rising demand of tax revenues and the challenges DTAs pose towards diluting the existing tax base as a result of a country redistributing its taxing rights. This analysis has looked through the recent DTAs that Kenya has signed with a view of establishing the model adopted and what ought to be included in order to promote financing development. From the review, Kenya risks losing the much-needed public resources through instances of round tripping and treaty shopping in cases where multinational will take advantages of the ambiguities in the articles contained in the said tax treaties. Further, the treaties are likely to propagate incidences of aggressive tax planning meaning Kenya losing a lot of tax revenue instead of the intended outcome of promoting investment and international trade. The review recommends the inclusion of the Limitation of Benefit rule , incorporation of an article on taxation of technical services and management fees and review a         provision on the alienation of immoveable property in Kenya through companies established in the other contracting states (UAE, NL & MU) taking into consideration the differential property tax regimes. Overall there is need to enhance transparency, public participation, and accountability in the treaty formulation and implementation of tax treaties.Read more on the Kenya Mauritius Double Tax Agreement

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16/11/2018

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The Tax Justice Network-Africa (TJN-A) is a Pan-African initiative and a member of the Global Alliance for Tax Justice. Launched in January 2007 during the World Social Forum (WSF) held in Nairobi, TJN-A promotes socially- just, accountable and progressive taxation systems in Africa. It advocates for tax policies with pro-poor outcomes and tax systems that curb public resource leakages and enhance domestic resource mobilisation.

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