Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 22nd February, 2018.

PRESS RELEASE

Revised Double Taxation Avoidance Agreement (DTAA) between India and Kenya notified

The Double Taxation Avoidance Agreement (DTAA) between India and Kenya was signed and notified in 1985. Subsequently, the DTAA was renegotiated and a revised DTAA was signed between both countries on 11th July, 2016. The revised DTAA has been notified in the Official Gazette on 19th February, 2018.

Some of the key features of the revised DTAA are highlighted as under:

i. In order to promote cross border flow of investments and technology, the revised DTAA provides for reduction in withholding tax rates from 15% to 10% on dividends, from 15% to 10% on interest, from 20% to 10% on royalties and from 17.5% to 10% on fees for management, professional and technical services.

ii. The revised DTAA provides for a new Article on Limitation of Benefits to allow treaty benefits to bonafide residents of both countries, to combat treaty abuse by third country residents and to allow application of domestic law to prevent tax avoidance or evasion.

iii. The Article on Exchange of Information has been updated to the latest international standard to provide for exchange of information, including banking information for tax purposes, to the widest possible extent.

iv. A new Article on Assistance in Collection of Taxes has also been provided in the revised treaty which will enable assistance in collection of tax revenue claims between both countries.

The revised DTAA will improve transparency in tax matters, help curb tax evasion and tax avoidance, remove double taxation and will stimulate the flow of investment, technology and services between India and Kenya.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT.

Withholding tax reductions streamline cross-border investment and strengthen information exchange and anti-abuse measures under the revised DTAA. The amended bilateral tax treaty reduces withholding taxes on dividends, interest, royalties and service fees to promote cross border investment and technology transfer, introduces a Limitation of Benefits rule to prevent treaty abuse and allow domestic anti avoidance application, upgrades the Exchange of Information standard including banking information for tax purposes, and adds an Assistance in Collection of Taxes provision to enable mutual recovery of tax claims.