NEW DELHI: The government has notified revised tax treaty between India and Kenya which provides for lower withholding tax rate and mutual assistance in collection of tax revenue claims.
The revised Double Taxation Avoidance Agreement (DTAA) was notified on February 19, 2018, a finance ministry statement said.
In order to promote cross border flow of investments and technology, the revised DTAA provides for reduction in withholding tax rate on dividend and interest to 10 per cent from 15 per cent.
The withholding tax rate on royalties, and fees for management, professional, technical services has been slashed to 10 per cent from 20 per cent and 17.5 per cent, respectively.
The revised DTAA provides for a new Article on Limitation of Benefits to allow treaty benefits to bonafide residents of both countries, to combat treaty abuse by third country residents and to allow application of domestic law to prevent tax avoidance or evasion.
The revised treaty has been updated to the latest international standard to provide for exchange of information, including banking information for tax purposes, to the widest possible extent.
Also a new Article on Assistance in Collection of Taxes has been provided which will enable assistance in collection of tax revenue claims between both countries.
"The revised DTAA will improve transparency in tax matters, help curb tax evasion and tax avoidance, remove double taxation and will stimulate the flow of investment, technology and services between India and Kenya," the statement added.
Both the countries had first entered into the tax pact in 1985 and subsequently the DTAA was renegotiated and a revised DTAA was signed between both countries on July 11, 2016.
The treaty has now been notified on February 19, 2018.