Treaties & International Policy

The Treaties & International Policy office is tasked with managing international tax matters that include Double Taxation Agreements (DTAs), Mutual Agreement Procedures (MAP), Legislative Review and Implementation of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Agenda recommendations domestically.

Double Taxation Agreement (DTA) Management

• A Double Taxation Agreement (DTA) is a treaty between two or more countries to avoid double taxation of income and to enhance economic cooperation.
• This function of the office involves carrying out an in depth analysis of the DTA network and domestic tax systems of countries with which Kenya intends to negotiate and sign DTAs. The team prepares a report on this and shares it with the National Treasury to be used during the preparation phase and actual negotiation of the DTA.
• The office also provides interpretation of tax treaties which are in force between Kenya and other countries to ensure that they are properly applied and implemented. This interpretation is done upon request from taxpayers seeking to understand how treaties apply to their transactions.

Legislative Review

• This involves providing comprehensive policy analysis and advice to the National Treasury on all matters of taxation of cross border transactions.
• It involves identifying gaps in the international tax legal framework and designing and recommending amendments to legislation on all issues of cross border taxation.
• The proposals made are mainly in line with the policies being adopted internationally in order to minimize cases of base erosion and profit shifting in order to preserve the country’s tax base.

Participation in International Taxation meetings

• The meetings are held to develop international tax laws and policies intended to seal loopholes in domestic tax systems and to ensure that taxes are paid in the jurisdictions where value is created.
• The main bodies that organize these meetings are the OECD (Organisation for Economic Cooperation and Development), the UN (United Nations), ATAF (African Tax Administration Forum) and EARATC (East African Revenue Authority Technical Committee).
• This engagement is beneficial because it ensures that developing country perspectives are incorporated in the development of international tax policies.

Mutual Agreement Procedure (MAP) - Dispute Resolution

• A Mutual Agreement Procedure (MAP) is a process through which taxpayers approach the Competent Authorities of the parties to the DTA in order for them to address cases of double taxation or taxation not in accordance with the DTA.
• A Kenyan resident taxpayer can initiate a MAP with the Kenyan Competent Authority if he establishes that an action of KRA or one of Kenya’s tax treaty partners, or both, will result in taxation not in accordance with a tax treaty in force between the two jurisdictions.
• The MAP request must be filed within 3 years from the date of notification of the act.
• Where the Kenyan Competent Authority can resolve the taxation not in accordance with the DTA unilaterally, then the MAP case is closed at this stage.
• Where the taxation not in accordance with the DTA cannot be resolved unilaterally, the two Competent Authorities will enter into discussions and endeavour to resolve the issue.