Kenya and India boost economic relations with new tax agreement

President Uhuru Kenyatta meets India's Prime Minister Narendra Modi on the sidelines of the 8th Vibrant Gujarat Global Summit 2017

SUMMARY

• China has fuelled its investments and strengthened its trade ties with Kenya in recent years
• Indian Prime Minister Narendra Modi, in a visit to Kenya as part of his four nation African tour last year, signed seven other agreements

Kenya has ratified a double taxation agreement with India to attract more investment from the Asian economic giant.

India has in recent times enhanced its efforts to topple China as Kenya’s top Asian trade partner.

China has fuelled its investments and strengthened its trade ties with Kenya in recent years.

Legal notice

The deal ratified by Treasury by way of legal notice No.147 of 2017 in the latest issue of the Kenya Gazette will, among others, push for the avoidance of double taxation of commercial entities trading both in India and Kenya. It will also step up pressure on tax cheats operating in both countries since it provides for the sharing of fiscal information between the nations’ tax bodies.

Mbiki Kamanjira, a tax expert with financial services firm Grant Thornton, says the agreement could benefit Kenya significantly.

“India is not only yearning to topple China as Kenya’s foremost trading partner, but also the trading partner of other African economic powerhouses such as Ghana, Angola, and even Nigeria, where China has a strong foothold. If Kenya can capitalise on this quest by India, then the country can squeeze out some good trade bargains,” he said.

Indian Prime Minister Narendra Modi, in a visit to Kenya as part of his four nation African tour last year, signed seven other agreements following talks with President Uhuru Kenyatta.

Defence cooperation

The two countries signed memorandums of understanding on defence cooperation, standardisation, and sharing of expertise between the Bureau of Indian Standards and the Kenya Bureau of Standards.

Other MoUs were on cooperation in national housing policy development and credit lines worth Sh4.5 billion.