Kenya plans to sign an agreement with Ireland to eradicate double taxation of income or gains arising in one country and paid to residents of the other country.
The National Treasury this week asked Kenyans for their views before Kenya signs the deal.
Kenya plans to sign an agreement with Ireland to eradicate double taxation of income or gains arising in one country and paid to residents of the other country.
The new deal, which will be subject to ratification by both the Irish and Kenyan parliaments, is set to create a conducive environment for investments, trade in goods and services between the two countries by removing uncertainties caused by having two different jurisdictions at play.
The National Treasury this week asked Kenyans for their views before Kenya signs the deal.
"This Agreement shall apply to taxes on income and capital gains imposed by each contracting state, irrespective of the manner in which they are levied," reads the agreement.
"Profits of an enterprise of a contracting state shall be taxable only in that State unless the enterprise carries on business in the other state through a permanent establishment situated therein."
Principal exports from Ireland to Kenya include manufacturing metals, office machines, cereals and beverages. Key imports from Kenya to Ireland include coffee, tea, fruits and vegetables.
The value of trade in services between Ireland and Kenya has grown by more than 20 percent annually since the reopening of the Ireland Embassy in Nairobi in 2014 and is now totalling more than $160 million per year.
In 2019, more than 40 Irish companies inked investment deals worth Sh4.8 billion with their Kenyan counterparts.
Kenya has increased the number of double-taxation pacts with key trade partners, signalling resolve to boost flow of investments.
Parties who get these deals are protected from double taxation, one of the issues that contribute to low investor interest in a country.
New double-tax treaties (DTTs) with key trade partners such as the East African Community and the United Arab Emirates (UAE) have been concluded.
Double taxation leads to losing significant portion of income for both individuals and corporations, which also face the challenges of incurring higher employee costs as a result of the higher taxes expatriate labour has to pay.
Kenya has double tax treaties with the UK, Canada, Denmark, Norway, India, Sweden, Zambia and Germany among others.