Tax Alerts

We provide a wealth of publications by PwC Kenya providing informed commentary on current developments in the tax arena.

Through analysis and comment on new law and judicial decisions of interest, they assist business executives to identify developments and trends in tax law and revenue practice that might impact their business.

In this alert:

Tax Alert - High Court affirms that WHT on Management and Professional fees is not payable in Kenya under the Kenya-France DTA

The High Court on 4 July 2024 issued a judgment in the case of Commissioner of Domestic Taxes vs Total Kenya Limited, E044 of 2021, which addressed whether management/professional fees paid by Total Kenya to its French resident holding company should be subject to withholding tax in Kenya. The Tax Appeals Tribunal (TAT) had previously ruled that no Withholding was applicable on these payments, a decision that was upheld by the High Court on appeal.

The High Court affirmed that under the Kenya-France DTA, there is no express and specific provision for withholding tax on management and professional fees paid to a French resident company as a result such fees are treated as business profits under Article 7 of the DTA, which deals with taxation of business profits by France.The Court rejected the Commissioner's argument that these fees should be taxed by Kenya under Article 21 of the DTA, emphasizing that Article 21 pertains to 'miscellaneous incomes' and does not cover management and professional fees.

Effectively, DTAs that are structured similarly to the Kenya-France DTA such as the Kenya- South Africa DTA do not subject management and professional fees to tax in Kenya.