The document is the Convention between Italy and Kenya for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income.General Information

• Date of Conclusion: 15 October 1979.

• Entry into Force: On the date of the exchange of instruments of ratification, with provisions having retroactive effect as of 1 January 1979.

• Scope: Applies to persons who are residents of one or both of the Contracting States.

• Taxes Covered:

  • Kenya: The income tax (Kenyan tax).

  • Italy: The personal income tax (l'imposta sul reddito delle persone fisiche) and the corporate income tax (l'imposta sul reddito delle persone giuridiche) (Italian tax).

  • Covers all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of property and taxes on wages/salaries paid by enterprises.

Taxation of Specific Income

• Dividends (Article 10): May be taxed in the state of residence of the company paying the dividends, but the tax shall not exceed:

  • 15 percent of the gross amount if the recipient company owns at least 25 percent of the voting shares.

  • 20 percent of the gross amount in all other cases.

  • A company resident in Kenya with a permanent establishment in Kenya remains subject to an additional tax rate not exceeding 7.5 percent.

• Interest (Article 11): May be taxed in the State where it arises, but the tax shall not exceed 15 percent of the gross amount.

• Royalties (Article 12): May be taxed in the State where they arise, but the tax shall not exceed 15 percent of the gross amount.

• Shipping and Air Transport (Article 8):

  • Profits from the operation of aircraft in international traffic are taxable only in the State where the place of effective management is situated.

  • Profits from the operation of ships in international traffic may be taxed in the State where the effective management is situated, but if taxed in the other Contracting State, the tax charged shall be reduced by fifty percent.

Elimination of Double Taxation (Article 23)

• Kenya: Allows a credit against Kenyan tax for tax payable in Italy, provided the credit does not exceed the Kenyan tax appropriate to the income from Italy.

• Italy: May include the items of income taxable in Kenya in the tax base, but shall deduct the Kenyan tax paid. This deduction is limited to the Italian tax proportional to the income from Kenya.

• If tax on business profits in a Contracting State is exempted or reduced for a limited time, the exempted or reduced tax shall be deemed to have been paid at an amount not exceeding 25% of the business profits.