Kenya and China have signed an agreement to eliminate double taxation.
Trade between the two countries has been rising consistently in recent years with both countries believing the agreement will help increase investment opportunities in both nations.
Kenya has signed 20 similar agreements with other nations and says trade with those partners has improved.
It is now inviting Chinese investors in sectors like agriculture, textile and energy. A move that Kenya hopes will offset the current trade imbalance, that stands at about $3.1 billion against Kenya.
Kenya’s Treasury Principal Secretary Kamau Thugge says the agreement will create certainty to taxpayers on the taxation of various cross-border incomes derived from either country.
“The elimination will also help in ensuring that there is no tax avoidance and evasion through tax planning as we seek to eliminate double taxation,” Thugge said.
“Additionally, it will foster deeper relations between tax administrations of the two countries through capacity building and exchange programmes to ensure that we transfer skills on taxation matters, including customs matters.”
China is currently the leading source of Kenya’s imports that stood at KSh337.4 billion($3 b) in 2016.
China is also Kenya’s leading bilateral donor at KSh646.6 billion($6.3 b) and a loan portfolio of Exim Bank and other financial institutions of KSh620.9 billion ($6 b).