21 September 2017

Kenya, China Sign Pact on Eliminating Double Taxation

Nairobi — The governments of Kenya and China have signed an agreement on the elimination of double taxation with respect to taxes on income and prevention of tax evasion.

Treasury Principal Secretary Kamau Thugge says the agreement will create certainty to taxpayers on the taxation of various cross-border incomes derived from either country.

"The elimination will also help in ensuring that there is no tax avoidance and evasion through tax planning as we seek to eliminate double taxation," Thugge said.

"Additionally, it will foster deeper relations between tax administrations of the two countries through capacity building and exchange programmes to ensure that we transfer skills on taxation matters, including customs matters."

Treasury Cabinet Secretary Henry Rotich echoed Thugge's sentiments saying the move would make Kenya more attractive in the eyes of investors.

"With this, we have a base to attract investors from China to come in. With the rising cost of living in China, we expect relocations by investors who will be seeking places to establish their businesses," Rotich said.

China is currently the leading source of Kenya's imports that stood at Sh337.4 billion in 2016 against Kenya's exports of Sh10 billion.

It is also Kenya's leading bilateral donor at Sh646.6 billion and a loan portfolio of Exim Bank and other financial institutions of Sh620.9 billion.

The funds have largely been used to fund infrastructure development such the construction of the Standard Gauge Railway (SGR), which was constructed by Chinese firms.

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