Kenya Gazette Supplement No. 63 30th September, 1977 ...

1 Kenya Gazette Supplement No. 63 S7S 30th september , 1977 ( legislative Supplement No. 48) LEGAL NOTICB No. 253 1HE INCOME TAX ACT (Cap. 470) TIm DOUBLE TAXATION RELIEF (UNITED KINGDOM OF GREAT BRITAIN AND NollTHEllN IRELAlID) NoTIcE. 1977 IN of ,the powers conferred by section 41 of the lDearne. Tax, the Miniater for Finance and Planning hereby declares that the specified in the Schedule hereto, being a~ made between the Government of the Republic of ~ya, aDd the Government of the United Kingdom of Great Britain Northern Ireland in articles of agreement &igned on 31st July. 1973. as amended by a protocol signed on 20th January, 1976. and by all exchange of letters signed on 8th February. 1977 . with a view b:r aftbrdiDl relief from double taxation in relation to income tax UIlder the Act and-any taxes of a similar character imposed by the laws of ttie United Kingdom of Great Britain and Northern Ireland.

2 Shall. notwithstanding anything to the contrary in the Act or in any other written. law. have effect in relation to ~me tax under the Act. ~HEDULE ~--The Gowmment of the Ilepublic of Kenya and the Government of tile. United Kiogdom of Great Britain and Northern Ireland; DeairiDg to CQIlclude all agreement for the avoidance of double taxation and the prevention of fiscal with respect to taxes on income and capital gains; lJ&\re, u foDaM: ARTlCLB 1 j Scope 1bis-A,reement Iball IIPPly to pel'SODl who are residents of one r hofttl at tbe Contractiq States. 2 TllXea CDY""ed (1) The taxes which are the subject of this Agreement are:-(Nia. ,dae Uaited KiDadom of Great Br:iWn a!ld Northern Ireland: (i) the income tax; (ii) tJae colpDratiou tax; and (ill) the capital gains tax; (b).in. : (f) the income taJt; and (ii) the graduated personal tax. 576 Kenya Subsidiary Legislation.)

3 1977 (2) This Agreement shall also apply to any identical or sub-stantially similar taxes which are imposed by either Contracting State after the date of signature of this Agreement in addition tOt or in place oft the existing taxes. The competent authorities of the Contracting States shall notify to each other any changes which are made in their respective taxation laws. ARTICLE 3 General Definitions (1) In this Agreement, unless the context otherwise requires-(a) the term "United Kingdom" means Great Britain and North-ern Ireland. including any area outside the territorial sea of the United Kingdom which in accordance with international law has been or may hereafter be designated, under the laws of the United Kingdom concerning the Continental Shelf. as an area within which the rights of the United Kingdom with respect to the sea bed and sub-soil and their natura' resources may be exercised; (b) the term "Kenyan means the Republic of Kenya , including any area adjacent to the territorial waters of Kenya desig-nated.

4 In accordance with international law, as an area within which Kenya may exercise rights with respect to the sea bed and sub-soil and their naturaJ resources; (c) the term "'nationals" (i) in relation to the United Kingdom, all citizens of the United Kingdom and Colonies who derive their status as such from their connection with the United Kingdom and all legal persons, partnerships and associations deriving their status as such from the law in force in the United Kingdom; (ii) in relation to Kenya . all citizens of the Republic of Kenya and all legal persons, partnerships and asso-ciations deriving their status as such from the Jaw in force in Kenya ; (d) the term "United Kingdom tax" means tax imposed by the United Kingdom being tax to which this Agreement applies by virtue of the provisions of Article 2; the term "Keny. tax" means tax imposed by Kenya being tax to which this Agreement applies by virtue of the provisions of Article 2: but neither of these terms are to include any tax payable in the United Kingdom or Kenya which is payable in respect of any default or omission in relation to the taxes which are the subject of this Agreement or which represents a penalty imposed under the law of the United Kingdom or Kenya relating to those taxes; (e) the term "tax" means United Kingdom tax or Kenya tax, as the context requires; (/) the tenns "a Contracting State' and "the other Contracting Staten mean the United Kingdom or Kenya , as the context requires; Kenya Subsidiary Legillation, 1977 (g) the term "persons" means-(i) in relation to the United Kingdom an individual, a com-pany and any other body of persons.

5 (ii) in relation to Kenya an individual, a company and any other body of persons treated as an entity for tax purposes; (h) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; (z1 the ten:ns "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enter-prise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; UJ the term "competent authority" means, in the case of the United Kingdom the Commissioners of Inland Revenue or their authorized representative, and in the case of Kenya the Minister for Finance or his authorized representative. (2) As regards the application of this Agreement by a Contracting State any term not otherwise defined shall. unless the context other-wise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of this Agreement.)

6 ARTICLE. 4 Fiscal Domicile (1) For the purposes of this Agreement, the term "resident of a Contracting State" means. subject to the provisions of paragraphs (2) and (3) of this Article. any person who, under the law of that State. is liable to taxation therein by reason of his domicile, residence. place of management or any other criterion of a similar nature. The terms '''resident of the United Kingdom" and "resident of Kenya " shall be construed accordingly. (2) Where by reason of the provisions of paragraph (1) of this Article an individual is a resident of both Contracting States. then jais status shall be determined in accordance with the following rules: (a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States. he shall be deemed to be a resident of the Contract-ing State with which his personal and economic relations are closest (hereinafter referred to as his centre of vital interests)~ (b) if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode; (c) if he bas an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national; 577 578 Kenya Subsidiary Legislation.

7 1977 (d) if he is a national of both Contracting States or of neither .. of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. (3) Where by reason of the provisions of paragraph (1) of this Article a person other than an individual is a resident of both Con-, tracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated. ARTICLE S Permanent Establishment (I) For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business in which the business of the enterprise is wholly or partly carried on. (2) The term upermanent establishment" shall include especially: (a) a place of management; (b) a branch; (e) an office; (d) a factory; (e) a workshop; (f) a mine. oil well, quarry or other place of extraction of natural resources; (g) a farm, plantation or other place where agricultural, forestry.

8 Plantation or related activities are carried on; (h) a building site or construction of assembly project which exists for more than six months; (i) the provision of supervisory activities for more than six months on a building site or construction or assembly project. (3) The term "permanent establishment" shall not be deemed to include: (a) the use of facilities solely for the purpose of storage, displar or delivery of goods or merchandise belonging to tht. enterprise; (b) the maintenance of a stock of goods or merchandise belongin .. to the enterprise solely for the purpose of storage, display or delivery; (e) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandi&e, or for collect-ing information, for the enterprise; (e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information.

9 For scientific research or for similar activities which have a .. preparatory or auxiliary character, for the enterprise. KenyaSubsldlary Legislation. 1977 (4) An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on the activity of providing the services within that other Contracting State of public entertainers or athletes referred to in Article 19. _ (5) A person acting in a Contracting State on behalf of an enter-prise of the other Contracting State-other than an agent of an independent status to whom the provisions of paragraph (7) of this Article apply-shall be deemed to be a permanent establishment in the first-mentioned State if: (a) he has, and habitually exercises in that State. an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purpose of goods or merchandise for the enterprise; or (b) he maintains in tha t State a stock of goods or merchandise belonging to the enterprise from which he regularly fulfils orders on behalf of that enterprise.

10 (6) An insurance enterprise of a Contracting State shall be deeIped to have a permanent establishment in the other Contracting State if it collects premiums in that other State or insures risks therein through an employee or through a representative who is not an agent of independent status within the meaning of paragraph (7). (7) An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. An agent shall not, however, be deemed to be an agent of an independent status within the meaning of this paragraph if his activities are devoted wholly or almost who]]y to the business of. that enterprise.