India Gazettes Revised Tax Treaty With Kenya

India Gazettes Revised Tax Treaty With Kenya

On February 19, 2018, India gazetted a revised tax treaty with Kenya. The revised treaty was signed by both countries in July 2016.

The revised treaty reduces withholding tax rates for dividends, royalties, interest, and fees for management, professional, and technical services to promote cross-border flow of investments and technology.

The new rates are:

  • Dividends: 10 percent (from 15 percent)
  • Interest: 10 percent (from 15 percent)
  • Royalties: 10 percent (from 20 percent)
  • Fees for management, professional, and technical services: 10 percent (from 17.5 percent)

Next, the revised tax treaty provides for a new Limitation of Benefits Article to prevent grant of treaty benefits in inappropriate circumstances and to tackle treaty abuse by third-country residents.

The Exchange of Information Article has been updated to align it with the latest international standards, and a new Article on Assistance in Collection of Taxes has been incorporated to facilitate collection of tax revenue claims between both countries.

The Central Board of Direct Taxes said: “The revised tax treaty will improve transparency in tax matters, help curb tax avoidance, remove double taxation, and will stimulate the flow of investment, technology, and services between India and Kenya.”