The Income Tax Treaty between Kenya and Mauritius was signed on 7 May 2012. Details of the treaty have become available now.
The treaty generally follows the UN Model Tax Convention. However, some deviations from the UN model exist which are as follows:
- The definition of permanent establishment would include a warehouse in relation to a person providing storage facilities and an installation or structure used for the exploration of natural resources.
- The permanent establishment threshold for construction activities would be 12 months.
- Article 5(4) of the treaty follows the OECD Model Tax Convention of 2010.
- Article 12 concerning royalties does not include in the definition of royalties payments the use of, or the right to use, industrial, commercial or scientific equipment.
- Article 13 of capital gains does not include provisions concerning taxation procedure of capital gains from the disposal of substantial participation and real estate companies.
- The treaty does not contain any provision on independent personal services.
The maximum withholding tax rate would be 10% and 5% if the beneficial owner is a company with direct holding of at least 10% capital of the company. On interest the maximum withholding tax rate would be 10% and would be subject to exceptions on certain situations. The royalties the rate would be 10%.
To avoid double taxation Mauritius generally follows the ordinary credit method whereas Kenya follows the exemption with progression method in general.
