Kenya and France Double Tax Agreement: What It Means for Businesses and Individuals
The Kenya-France Double Taxation Agreement (DTA) was signed on 11th December 2020 between the two countries to avoid double taxation and to prevent tax evasion for businesses and individuals operating in both countries. The agreement clarifies the taxation rights of both countries on different types of income such as dividends, royalties, capital gains, and interest.
Under the DTA, taxes may be levied on income from dividends, interest, and royalties in the source country (where the income originates) but may also be taxed in the resident country (where the recipient resides). The DTA also provides relief for individuals and businesses by reducing the tax rate or allowing tax credits for taxes paid in the other country.
For businesses operating in both countries, the DTA will provide clarity on the taxation rules and avoid double taxation, which may affect the competitiveness of companies in both countries. Additionally, the DTA will reduce the tax burden on businesses that operate cross-border, which may encourage investments and trade between Kenya and France.
Under the DTA, capital gains arising from the sale of shares in a company will only be taxable in the country where the seller is resident. This provision will encourage foreign investments and ease the tax burden on the investor.
The DTA is also beneficial for individuals who operate businesses in both countries. The agreement will reduce the tax burden on personal income, and ensure that only the right amount of tax is paid. Additionally, the DTA will allow individuals to claim tax credits for taxes paid in the other country, or reduce their tax rate, which will significantly lower the tax burden on them.
In conclusion, the Kenya-France Double Taxation Agreement is a significant step towards promoting cross-border trade and investments between the two countries. The DTA will ensure that taxpayers are not subjected to double taxation, which may discourage foreign investment and business in both countries. Additionally, the clarity provided by the DTA will reduce compliance costs for businesses and encourage cross-border investments and trade. Overall, the agreement will benefit both countries by strengthening their economic ties and enhancing their competitiveness in the global economy.