NGO says recently nullified Double Tax Avoidance Agreement between Kenya & Mauritius could have been used for tax evasion by businesses
Author: Victor Amadala, The Star(Kenya), Published on: 8 April 2019
"Kenya-Mauritius Double Tax Avoidance void, High Court rules"
The High Court has declared void and unconstitutional the Double Tax Avoidance Agreement (DTAA) between Kenya and Mauritius. The treaty allows residents of a third country to design their business structures to take the advantage of DTAAs of a country with another country and avoid the payment of tax. Experts warn there is a very thin line between tax evasion and tax avoidance. In reading the Judgment, Justice Korir granted Tax Justice Network Africa’s (TJNA) submission by declaring void Legal Notice No. 59 of 2014 which renders the Kenya/Mauritius DTA void and unconstitutional...
The ruling validates the call for African countries to review all their tax treaties particularly those signed with tax havens.
"Evidence has shown that contrary to their objectives, these DTAs have led to double non-taxation and resulted to massive revenue leakage for African countries,’’ said TJNA executive director Alvin Mosioma. He added that the ruling underscores his organisation’s position that DTAs signed especially with tax havens have been avenues of tax avoidance practices denying African countries the much sought-after revenues to finance development. "It rightly pushes us to rethink the costs, benefits and motivations around signing DTAs in the first place. We should therefore set up a DTA policy framework – which sets out the basic minimums the country should consider while signing bilateral tax agreements,’’ Mosioma said.