IN SUMMARY

• The new deal is set to create a conducive environment for investments and trade in goods and services between the two countries by removing uncertainties on taxation.
• The bilateral DTA was signed in 1979 but had not been ratified by Kenya following some outstanding issues that were contained in the Protocol to the Convention which will now be addressed by the Joint Declaration.

Kenya last week signed a joint declaration on avoidance of double taxation (DTA) with Italy to eradicate DTA of income or gains arising in one country and paid to residents of the other country.

The new deal is set to create a conducive environment for investments and trade in goods and services between the two countries by removing uncertainties on taxation occasioned by having two different jurisdictions at play.

The bilateral DTA was signed in 1979 but had not been ratified by Kenya following some outstanding issues that were contained in the Protocol to the Convention which will now be addressed by the Joint Declaration.

“Other benefits of the DTA include facilitation in tax administration through sharing of information by tax authorities of the two countries thus checking tax evasion,” said National Treasury Cabinet Secretary Henry Rotich.

Mr Rotich was speaking during a meeting with the Minister for Economy and Finances of the Italian Republic, Pier Carlo Padoan, in Rome, Italy.

He said that he was confident the signing and eventual implementation of the Joint Declaration will facilitate the ratification of and bring into force the Convention on DTA and encourage greater flow of investments and trade between the two countries.

Kenya mostly exports horticultural products to Italy while importing plant and machinery from the south European country.

Italy is one of the country’s largest tourist markets in Europe after Germany and France while Kenya is considered an access point to east African markets and one of Italy’s primary export markets in Africa.

Exports to Italy in 2014, for instance, were worth Sh7 billion against imports worth Sh21 billion, representing a trade deficit of Sh14 billion.

Mr Rotich said that Kenya provides investors with an opportunity to access the regional market with a combined population of 145 million people and a gross domestic product of $148 billion and COMESA region with a population of 400 million.

Source: Business Daily

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.