Double Tax Avoidance Treaty with Mauritius declared Null and Void

On 15th March 2019, the Constitutional division of the High Court held that the Kenya-Mauritius Double Taxation Treaty signed in 2012 was null and void because the Kenyan government had failed to follow due process under the Statutory Instruments Act 2013. Though signed in 2012, it was yet to come into force because Kenya had not ratified it.

In instances where countries get into double taxation treaties with tax havens, the host country loses a lot of revenue that could have been retained through corporate tax. Both local and foreign investors would therefore be able to dodge tax by setting up offshore shell companies in Mauritius.

The effect of this judgment is that the double taxation tax treaty with Mauritius is null and void. This may call into question and re-negotiation of other double taxation tax treaties that Kenya has with countries such as China, the UAE, Netherlands and South Korea. It also means Kenya will be less competitive compared to other countries in Africa that have similar double taxation tax treaties. It is still unclear whether the government will appeal this decision.

The case citation is Constitutional Petition No. 494 of 2014: The Tax Justice Network Africa vs. CS National Treasury & 2 Others.