The Kenya Mauritius Double Taxation Agreement
Petition of the Tax Justice Network Africa
Mauritius and Kenya had signed a Double Taxation Agreement (“DTA”) in May 2012. On the 3rd October 2014, the Tax Justice Network Africa (“TJN-A”) filed a petition against the Kenya-Mauritius DTA whereby they had stated that the said DTA was unconstitutional for various reasons such as the lack of public participation in the DTA exercise, the lack of openness in the process and that the DTA was not for the benefit of Kenya.
Verdict of the High Court
On the 15th March 2019, the High Court of Kenya invalidated the Kenya-Mauritius DTA due to a failure to table the legal notice. As per the Statutory Instruments Act 2013 (“SIA 2013”), the Cabinet Secretary in charge of Finance needs to table the legal notice to give effect to the DTA to the National Assembly.
The High Court of Kenya declared that the DTA was void because it was not tabled before Parliament within the time period required by the SIA 2013 and not due to the economic argument that has been raised by the TJN-A.
The Kenya and Mauritius strengthening economic and bilateral relationship
Kenya and Mauritius share a history of bilateral relations. Both countries share nearly five decades of bilateral economic relations in areas of trade and investment. In 2018, Mauritius had a Balance of Trade surplus with Kenya, boasting exports of around MUR 1.95 billion against imports of MUR 1.4 billion. In addition, over USD 2 billion of investment was made in Kenya through the Mauritius International Financial Centre where 245 structures were engaged in channeling these investments in 2018.
Both countries certainly envisage taking this business relationship to new dimensions which would only be possible with the ratification of the DTA. In order to ratify Kenya- Mauritius DTA, the Government of Kenya will have to publish a fresh Legal Notice in the Kenya Gazette, which will have to be tabled before the National Assembly as per the procedures and timelines stipulated in the SIA 2013.
Consolidating Avenues of Cooperation
The President of Kenya, Mr. Uhuru Kenyatta was on a 4-day state visit to Mauritius from the 9th to 12th April in a bid to further consolidate economic and bilateral relations and discuss new avenues of cooperation between the 2 countries. During his visit, 6 agreements were signed, including a new Double Taxation Agreement (DTA) and an Investment Promotion and Protection Agreement.
We now therefore await for the passing of the relevant legislations and subsequent administrative procedures to give effect to the new Kenya-Mauritius treaty and look forward for this new DTA to further boost economic trade and exchanges between both countries.