Kenyan residents may claim foreign tax relief under Double Tax Treaties (DTTs) or through unilateral tax credits for Kenyan citizens.

1. Foreign Tax Relief

• Foreign tax credits apply where a DTT exists between Kenya and another jurisdiction.
• Unilateral tax credits are available for Kenyan citizens even if no DTT is in place.

2. Kenya’s Double Tax Treaties (DTTs)

A Double Taxation Treaty (DTT) is an agreement between two countries to prevent individuals and businesses from being taxed twice on the same income. These treaties promote trade, investment, and economic cooperation by clarifying tax obligations and reducing tax burdens.

Key Features of a Double Taxation Treaty:

• Prevention of Double Taxation: Ensures that income is not taxed in both countries through exemptions or tax credits.

• Allocation of Taxing Rights: Defines which country has the right to tax specific types of income, such as business profits, dividends, and royalties.

• Reduced Withholding Tax Rates: Lowers tax rates on cross-border payments like dividends, interest, and royalties to encourage investment.

• Residency Rules: Establishes criteria for determining tax residency to avoid conflicts.

• Anti-Tax Avoidance Measures: Includes provisions to prevent tax evasion and abuse of treaty benefits.
• Dispute Resolution Mechanisms: Provides guidelines for resolving conflicts between tax authorities of the two countries