× Business BUSINESS MOTORING SHIPPING & LOGISTICS DR PESA FINANCIAL STANDARD Digital News Videos Health & Science Lifestyle Opinion Education Columnists Moi Cabinets Arts & Culture Fact Check Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS

DTA with Mauritius scrutinised

By Macharia Kamau | April 29th 2019

President Uhuru Kenyatta today met and held talks with H.E. Paramasivum Pillay Vyapoory, Acting President of the Republic of Mauritius at State House, Le Réduit. President Uhuru Kenyatta was accompanied by Cabinet Secretaries Monica Juma (Foreign Affairs) and Prof. George Magoha (Education) among other senior government officials. [Photo: Standard]

An agreement that Kenya entered into with Mauritius a month ago enabling companies operating in the two countries avoid double taxation could be headed to court as a tax lobby questions its legality

Kenya and Mauritius signed a Double Taxation Avoidance (DTA) agreement during President Uhuru Kenyatta’s visit to the country in March. The DTA is, however, being contested with lobbyists noting that the State may have disregarded a court ruling that nullified a tax avoidance agreement signed by the two countries in 2012.

The 2012 agreement was declared unconstitutional by the court a week before the President’s visit to Mauritius. The Tax Justice Network Africa (TJNA) had moved to court to have the 2012 agreement nullified, claiming it was unconstitutional and would undermine Kenya.

“All we know is that the government has negotiated a new treaty but do not know when and the negotiations took place. The ruling for the 2012 agreement happened in March and the President travelled to Mauritius a few days later and the agreement was signed during the visit. Under what circumstances was that treaty signed? That for us is a red flag,” said TJNA Executive Director Alvin Mosioma

The Government could appeal the case and if it wins, it could pose a challenge for State agencies implementing the pact and investors looking to take advantage of the opportunities.

“It raises questions. What happens if the Government wins in the Court of Appeal or in Supreme Court if it decides to appeal? There will be two DTAs running concurrently,” said Mosioma.

He said the signing an agreement before the earlier one is decided upon by the courts is a big policy contradiction. “We will pursue the DTA to the Supreme Court, if there is a need to, and if we win, the court decision will supersede the new DTA,” he said.

Mosioma noted that such agreements could work in the favour of Kenya, but many have been skewed to benefit a few individuals in Government. This, he noted leaves loopholes for businesses to exploit and avoid paying taxes.

He said a DTA was meant to help firms not to be taxed in two jurisdictions where they have operations but companies end up abusing the gaps and loopholes in the treaty.

He noted that despite State officials having good negotiation skills, the country usually loses out due to personal interests.

Share this story
Incentivise conferencing, State told
The Government has been asked to open up the conferencing and events industry to private players if it has to reach its full potential.
Survey: Why 40 pc of workers want to quit their jobs
More than half of 18 to 25 year-olds in the workforce are considering quitting their job. And they are not the only ones.