President Uhuru Kenyatta was on a 4-day state visit to Mauritius from the 9th to 12th April in a bid to further consolidate economic and bilateral relations and discuss new avenues of cooperation between the 2 countries. During his visit, 6 agreements were signed, including:
- A new Double Taxation Avoidance Agreement (DTAA); and
- An Investment Promotion and Protection Agreement
What happened to the Kenya-Mauritius Initial DTAA? It will be recalled that Kenya and Mauritius had initially signed a DTAA in May 2012 (hereinafter referred to as the “Initial DTAA”) which was then ratified in Kenya on 23rd May 2014 through the publication of a legal notice (Legal Notice 59 of 2014) in the Kenya Gazette.
However, the Statutory Instruments Act 2013 (Kenyan local law), which came into force on 25th January 2013, required for the tabling of any statutory instrument, which would also include Legal Notice 59 of 2014, before the relevant House of Parliament within 7 sitting days of being published failing which it shall cease to have effect immediately after the last day for it to be so laid.
Following a petition filed by the Nairobi-based non-profit organization, Tax Justice Network – Africa (the “Petitioner”) before the High Court of Kenya in October 2014, the latter ruled in March 2019, that the Initial DTAA was void since it was never laid before the House of Parliament within the deadline prescribed in the Statutory Instruments Act 2013.
As a result, the Initial DTAA never came into force and it is also noted that the nullification of the Initial DTAA was due to a mere administrative / procedural glitch.
What’s next?
Interestingly, the absence of an active Kenya-Mauritius DTAA/nullification of the Initial DTAA was never an impediment to trade and other bilateral exchanges between both countries. In fact, Mauritius had a Balance of Trade surplus with Kenya in 2018, boasting exports of MUR 2 billion (circa. USD 58m) against imports of MUR 1.4 billion (circa. USD 40m).
We now await for the the passing of any relevant legislations and subsequent administrative procedures to give effect to the new Kenya-Mauritius treaty which was signed during Honourable President Uhuru Kenyatta’s visit to Mauritius last week. We expect the new DTAA to further boost economic trade and exchanges between both countries.
The economic benefits of having DTAA in place are irrefutable as they promote inter-country trade and investment, if drafted according to international best practices. Moreover, Mauritius is steering away from being a treaty-centric jurisdiction as it has a lot more to offer to international investors (bilingual and educated workforce, sophisticated banking and legal platform, work and live opportunities, excellent air and sea connectivity etc.). The island nation has always prided itself in being an economy of substance and in providing a transparent and modern framework and platform for investment into Africa.
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