India notifies revised pact on tax avoidance with Kenya

The Finance Ministry has notified a revised double tax avoidance agreement (DTAA) between India and Kenya with a lower withholding tax of 10 per cent on dividends, interest and royalty.

The two countries had signed and notified a DTAA in 1985, which was then revised on July 11, 2016.

“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,” the Finance Ministry said on Thursday.

Under the revised pact, the withholding tax on dividends and interest income has been cut to 10 per cent from the earlier 15 per cent, on royalties to 10 per cent from 20 per cent and on fees for management, professional and technical services to 10 per cent from the previous 17.5 per cent.

“It also 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,” said the Ministry.

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

The revised treaty also includes a new Article on Assistance in Collection of Taxes to help in cases of tax revenue claims between both the countries.