Mauritius signed a new Double Taxation Agreement (DTA) with Kenya on 10 April. It will replace the previous 2012 treaty, which was invalidated by the Kenyan High Court in March as a result of a legal challenge brought by Tax Justice Network Africa.
On 15 March, the Kenyan High Court held that the 2012 DTA, which was purportedly ratified by legal notice published in the Kenya Gazette in May 2014, was in fact invalid. The Kenyan government had failed to follow the correct ratification procedures because the agreement had not been properly laid before Parliament.
Tax Justice Network Africa also claimed that the 2012 treaty was harmful to Kenya because it reduced withholding tax on services, management fees and insurance commissions from 20% to 0% and provided for the right to tax capital gains from stock sales of Kenyan companies to reside with Mauritius, which does not levy any capital gains tax.
The new DTA has not yet been published, so it not known whether the disputed provisions have been included in the new treaty. It one of six agreements, including an Investment Protection and Promotion Agreement, signed by by Kenyan President Uhuru Muigai Kenyatta during a visit to Mauritius.