Kenya has signed a Double Taxation Agreement (DTA) with Singapore, adding to a long list of such pacts that it has signed with other countries in the past one year.
Treasury Cabinet Secretary Henry Rotich (pictured) yesterday said the agreement would help lure Singaporean investors, while facilitating the sharing of information between the two countries for better tax administration.
“It is true that we have signed a lot of these DTAs and the argument is that they tend to shrink our tax revenue since we avoid taxing companies or individuals coming from the countries that we have a DTA with,” he said.
“But Treasury is of the view that the investment that will come with a DTA outweighs any tax loss that can be experienced when the agreement comes into effect.”
In the last one year, Kenya has signed DTAs with Dubai, India, China, Kuwait, New Zealand, Netherlands and Qatar, among other countries.
Singapore Deputy Prime Minister Tharman Shanmugatatnam, who signed the agreement on behalf of his government, said the pact would benefit both tax authorities in checking tax evasion through sharing of information as well as stimulating foreign direct investment.
“The agreement is legally binding and is meant to protect and encourage investments in the two countries by increasing the comfort levels of the investors,” he said.
The signing comes in the midst of an increasing trade deficit between Kenya and Singapore.
Data from Treasury shows that exports to Singapore were worth Sh0.37 billion against imports worth Sh5.8 billion, representing a trade deficit of Sh5.5 billion.
Kenya exports tea, fruits, nuts and other other vegetables, while it imports synthetic fibres, construction equipment, general electronics and polymers.