Key Benefits:
President of the Republic,
On the report of the Prime Minister and the Minister for Foreign and European Affairs,
Considering the Constitution, in particular articles 52 to 55;
Vu la Act No. 2010-840 of 23 July 2010 authorizing the approval of the agreement between the Government of the French Republic and the Government of the Republic of Kenya with a view to avoiding double taxation and preventing tax evasion and tax evasion in respect of income tax (as a whole protocol), signed in Nairobi on 4 December 2007;
Vu le Decree No. 53-192 of 14 March 1953 amended on the ratification and publication of international commitments undertaken by France,
Decrete:
The agreement between the Government of the French Republic and the Government of the Republic of Kenya with a view to avoiding double taxation and preventing tax evasion and tax evasion in respect of income tax (a protocol), signed in Nairobi on 4 December 2007, will be published in the Official Journal of the French Republic.
The Prime Minister and the Minister for Foreign and European Affairs are responsible for the execution of this decree, which will be published in the Official Journal of the French Republic.
C O N V E N T I O N
BETWEEN THE GOVERNMENT OF THE FRANÇAISE REPUBLIC AND THE GOVERNMENT OF THE KENYA REPUBLIC TO EVIEW THE IMPOSIBLE DOUBLES AND PREVENTION THE FISCAL EVASION AND FRAUDEWORK ON THE FRENCH
The Government of the French Republic and the Government of the Republic of Kenya,
wishing to conclude a Convention to avoid double taxation and to prevent tax evasion and tax evasion on income tax,
agreed on the following provisions:
Article 1
Target persons
This Convention applies to persons who are residents of a Contracting State or both Contracting States.
Article 2
Taxes targeted
1. This Convention applies to income taxes collected on behalf of a Contracting State or its local authorities, irrespective of the system of collection.
2. Income taxes, taxes on total income or income elements, including taxes on gains from the alienation of movable or immovable property, taxes on the total amount of wages paid by businesses, and taxes on surplus-values.
3. Current taxes to which the Convention applies include:
(a) with regard to France;
(i) income tax;
(ii) widespread social contributions;
(iii) Contributions for the reimbursement of social debt;
(iv) corporate tax;
(v) the wage tax;
including all deductions from the source, all pre-payments and advances on these taxes (hereinafter referred to as "French tax");
(b) with respect to Kenya, the income taxes established by the Finance Act, Cap 470 (Income Tax Act, Cap. 470), (hereinafter referred to as Kenyan tax).
4. The Convention also applies to taxes of an identical or similar nature that would be established after the date of signature of the Convention and that would be in addition to or replace existing taxes. The competent authorities of the Contracting States shall communicate the substantial amendments to their respective tax laws.
Article 3
General definitions
1. For the purposes of this Convention, unless the context requires a different interpretation:
(a) the terms "contracting State" and "other Contracting State" mean France or Kenya, depending on the context;
(b) the term "France" means the European and overseas departments of the French Republic, including the territorial sea, and beyond that the zones on which, in accordance with international law, the French Republic has sovereign rights for the exploration and exploitation of the natural resources of the seabed, their basement and the underlying waters;
(c) the term "Kenya" means the entire territory of Kenya within its official boundaries, including inland and territorial waters, as well as the exclusive economic zone and continental shelf, and all facilities erected on these areas as defined by the Continental Plateau Act (Continental Shelf Act), on which Kenya has sovereign rights for the purposes of the exploitation of the natural resources of the seabed, their basement and the underlying waters,
(d) the term "person" includes natural persons, societies and all other groups of persons;
(e) the term "corporate" means any corporation, or entity that is considered, for taxation purposes, to be a corporation;
(f) the terms "company of a Contracting State" and "company of the other Contracting State" shall, respectively, designate a business operated by a resident of a Contracting State and a business operated by a resident of the other Contracting State;
(g) the term "international traffic" means any carriage by a ship or aircraft operated by an enterprise whose effective steering seat is located in a Contracting State, except where the vessel or aircraft is operated only between points in the other Contracting State;
(h) the term "competent authority" means:
(i) in the case of France, the Minister responsible for the budget or his authorized representative;
(ii) in the case of Kenya, the Minister of Finance or its authorized representative;
(i) The term "national" means:
(i) any natural person who has the nationality of a Contracting State;
(ii) any legal person, partnership or association incorporated in accordance with the legislation in force in a Contracting State.
2. For the purposes of the Convention at any time by a Contracting State, any term or expression not defined therein shall, at that time, have the meaning of the right of that State to which the Convention applies. The meaning attributed to this term or expression by the tax law of that State prevails over the meaning attributed to it by the other branches of the law of that State.
Article 4
Resident
1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is subject to tax in that State, because of his domicile, residence, management seat or any other similar criterion and also applies to that State and to all its local authorities. However, this term does not include persons who are subject to tax in that State only for income from sources located in that State or for the property located therein.
2. Where, according to the provisions of paragraph 1, a natural person is a resident of the two Contracting States, his or her situation shall be settled as follows:
(a) that person is considered to be a resident only of the State where it has a permanent home; if it has a permanent home in both states, it is considered to be a resident of the State with which its personal and economic ties are the narrowest (centre of vital interests) ;
(b) if the State where that person has the centre of its vital interests cannot be determined, or if it does not have a permanent home in any of the States, it is considered to be a resident only of the State where it normally resides;
(c) if the person normally stays in both States or if he or she does not normally stay in any of them, he or she is considered to be a resident only of the Contracting State of which he or she is a national;
(d) if the person possesses the nationality of the two States or has no nationality of any of them, the competent authorities of the Contracting States shall decide the question by mutual agreement.
3. Where, according to the provisions of paragraph 1, a person other than a natural person is a resident of the two Contracting States, it is considered to be a resident of the State where its effective management seat is located.
4. The term "resident of a Contracting State" includes partnership and groupings of persons whose effective management seat is located in a Contracting State and whose shareholders, associates or other members are personally subject to tax on the basis of their share in the profits of such companies or groups under the domestic legislation of that State.
Article 5
Stable establishment
1. For the purposes of this Convention, the term "stable establishment" means a fixed business facility through which a company operates all or part of its business.
2. The term "stable establishment" includes:
(a) a steering seat;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop and
(f) a mine, oil or gas well, a career or any other place of extraction of natural resources.
3. A construction or construction site is a permanent establishment only if its duration exceeds six months.
4. Notwithstanding the preceding provisions of this Article, it is considered that there is no "stable establishment" if:
(a) the use of facilities for the sole purpose of storage, exposure or delivery of goods owned by the company;
(b) goods belonging to the enterprise are stored for the sole purpose of storage, exposure or delivery;
(c) goods belonging to the enterprise are stored for the sole purpose of processing by another enterprise;
(d) a fixed business facility is used for the sole purpose of purchasing goods or collecting information for the company;
(e) a fixed business facility is used for the sole purpose of carrying out any other preparatory or auxiliary activity for the enterprise;
(f) a fixed business facility shall be used only for the purpose of the cumulative year of activities referred to in subparagraphs (a) to (e), provided that the overall activity of the fixed business facility resulting from this accumulated business shall be preparatory or auxiliary.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person — other than an agent enjoying an independent status to which paragraph 7 applies — shall act on behalf of a business and shall have in a Contracting State the powers that it normally exercise to enter into contracts on behalf of the undertaking, that undertaking shall be deemed to have a permanent establishment in that State for all activities that that that person exercises for the undertaking,
6. Notwithstanding the preceding provisions of this Article, an insurance company of a Contracting State shall be considered, except in respect of reinsurance, as having a permanent establishment in the other State if it receives premiums in the territory of that State or ensures the risks incurred therein, through a person other than an agent enjoying an independent status to which paragraph 7.
7. A business is not considered to have a permanent establishment in a Contracting State solely because it operates in it through a broker, a general commissioner or any other agent with an independent status, provided that such persons act within the ordinary framework of their business.
8. The fact that a corporation that is a resident of a Contracting State controls or is controlled by a corporation that is a resident of the other Contracting State or that operates therein (either through a permanent establishment or not) is not sufficient in itself to make any of these companies a permanent establishment of the other.
Article 6
Real estate income
1. Revenues from real property (including income from farms or forestry) are taxable in the Contracting State where such real property is located.
2. For the purposes of this Convention, the term "real property" has the meaning assigned to it by the law of the Contracting State in which the property is situated; the expression includes, in any case, accessories, dead or alive livestock of farms and forests, the rights to which the provisions of private law apply in respect of land ownership, the usufruct of real property and the rights to variable or fixed payments for exploitation, or the concession of exploitation, mineral deposits, sources and other natural resources; ships, ships and aircraft are not considered real property.
3. The provisions of paragraph 1 shall also apply to revenues derived from direct exploitation, lease or charter, as well as any other form of exploitation of real property.
4. The provisions of paragraphs 1 and 3 also apply to income from real property of a business as well as to income from real property used in the exercise of an independent profession.
5. Where shares, shares or other rights in a corporation, trust or any other comparable institution give the enjoyment of real property located in a Contracting State and held by that corporation, trust or comparable institution, income derived from direct use, lease or use in any other form of that right of enjoyment shall be taxable in that State notwithstanding the provisions of Articles 7 and 14.
Article 7
Business benefits
1. The profits of an enterprise of a Contracting State shall be taxable only in that State, unless the enterprise carries on business in the other Contracting State through a permanent establishment located therein. If the company operates in such a way, the profits of the company are taxable in the other State but only to the extent that they are attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where a business of a Contracting State carries on business in the other Contracting State through a permanent establishment located therein, it shall be charged in each Contracting State to that permanent establishment the profits that it could have realized if it had constituted a separate undertaking carrying out identical or similar activities under identical or similar conditions and dealing independently with the enterprise of which it constitutes a permanent establishment.
3. (a) In order to determine the benefits of a permanent establishment, deductions are made of the expenses incurred for the purposes of this permanent establishment, including the executive expenses and general administrative expenses so exposed, either in the State where the permanent establishment is located or elsewhere.
(b) Unless it can be demonstrated that another method is more appropriate, management expenses and general administration costs are determined by applying a percentage of the turnover or gross profits made by the stable establishment compared to that or those realized by the enterprise as a whole.
4. No profit is charged to a permanent establishment because it simply purchased goods for the company.
5. If it is customary in a Contracting State to determine the profits attributable to a permanent establishment on the basis of a distribution of the total profits of the enterprise between its various parties, no provision in paragraph 2 prevents that Contracting State from determining the taxable profits according to the distribution in use; the method of distribution adopted must, however, be such that the result obtained is consistent with the principles contained in this article.
6. For the purposes of the preceding paragraphs of this article, the benefits to be attributed to the permanent establishment are determined annually on the same basis, unless there are valid and sufficient grounds to proceed otherwise.
7. Where profits include income elements treated separately in other articles of this Convention, the provisions of these articles are not affected by the provisions of this article.
Article 8
Maritime and air navigation
1. The profits of an enterprise of a Contracting State arising from the operation of aircraft in international traffic shall be taxable only in the Contracting State where the effective management seat of the enterprise is located.
2. The profits of an enterprise of a Contracting State arising from the operation of ships in international traffic shall be taxable only in the Contracting State where the effective management seat of the enterprise is located.
However, where such an undertaking benefits from such an operation in the other Contracting State:
(a) These benefits are deemed to represent an amount not exceeding 5% of the total amount received by the company for the carriage of passengers or cargo in that other State; and
(b) The tax payable in this other State is reduced by half.
3. If the effective management seat of a marine navigation company is on board a ship or vessel, that seat shall be considered to be located in the Contracting State where the port of attachment of that ship or vessel is located or, if the vessel is not carrying a home, in the Contracting State of which the operator of the ship or vessel is a resident.
4. The provisions of paragraph 1 also apply to benefits derived from participation in a group ("pool"), a joint operation or an international operating organization.
5. The provisions of the agreement between the Government of the French Republic and the Government of the Republic of Kenya with a view to avoiding dual taxation of air transport in international traffic, signed on 12 January 1996, remain in force but these provisions apply to cases that are not covered by the provisions of this Convention or that are not subject to any of these provisions.
Article 9
Associated companies
1. When:
(a) a business of a Contracting State directly or indirectly participates in the direction, control or capital of a business of the other Contracting State, or
(b) the same persons directly or indirectly participate in the direction, control or capital of a business of a Contracting State and a business of the other Contracting State,
and that, in both cases, both companies are, in their commercial or financial relations, bound by agreed or imposed conditions that differ from those that would be agreed between independent companies, the profits that, without these conditions, would have been realized by one of the companies but could not be in fact because of these conditions, may be included in the profits of that undertaking and imposed accordingly.
2. When a Contracting State includes in the profits of a company of that State ― and imposes accordingly ― profits on which a company of the other Contracting State has been imposed in that other State and that the profits thus included are profits that would have been realized by the enterprise of the first State if the conditions agreed between the two enterprises had been those that would have been agreed between independent enterprises, the other State shall make an appropriate adjustment to the amount of the other To determine this adjustment, the other provisions of this Convention shall be taken into account and, if necessary, the competent authorities of the Contracting States shall consult.
Article 10
Dividends
1. Dividends paid by a corporation that is a resident of a Contracting State to a resident of the other Contracting State shall be taxable in that other State.
2. (a) The dividends referred to in paragraph 1 shall also be taxable in the Contracting State of which the corporation that pays the dividends is a resident and according to the law of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10% of the gross amount of the dividends;
(b) This subsection does not affect the corporation's taxation of profits that are used to pay dividends.
3. A resident of Kenya who receives dividends from a corporation that is a resident of France may obtain a refund of the pre-payment as the pre-payment was actually paid by the corporation on the basis of these dividends. The gross amount of the deposit refunded is considered a dividend for the purposes of the Convention. It is taxable in France in accordance with the provisions of paragraph 2. The provisions of paragraph 2 shall apply to that gross amount.
4. The term "dividend" refers to income derived from shares, shares or enjoyables, mine shares, founder shares or other beneficiary shares except for receivables, as well as income subject to the distribution regime by the tax legislation of the Contracting State whose distribution company is a resident. It is understood that the term "dividend" does not include the revenues referred to in section 16.
5. The provisions of paragraphs 1, 2 and 3 shall not apply where the beneficial owner of the dividends, a resident of a Contracting State, exercises in the other Contracting State whose dividend paying company is a resident, i.e. a business activity by means of a permanent establishment located therein, or an independent profession through a fixed base located therein, and that the income-generating interest of the dividends is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
6. Where a corporation that is a resident of a Contracting State derives from the profits or income of the other Contracting State, that other State may not collect any tax on the dividends paid by the corporation, except to the extent that such dividends are paid to a resident of that other State or to the extent that the dividend-generating interest is effectively connected to a permanent establishment or to a fixed base located in that other State, or prelever any
7. The provisions of this Article shall not apply if the principal objective or one of the principal objectives of any person involved in the creation or assignment of shares or other rights under which the dividends are paid is to take advantage of this Article by means of such creation or assignment.
Article 11
Interest
1. Interest arising from a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.
2. However, these interests are also taxable in the Contracting State in which they arise, and according to the law of that State, but if the beneficial owner of the interest is a resident of the other Contracting State the tax so established cannot exceed 12% of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, the interests referred to in paragraph 1 shall be taxable only in the Contracting State of which the person receiving the interest is a resident, if that person is the beneficial owner of the interest and if one of the following conditions is met:
(a) This person is one of the Contracting States, one of its local authorities, or one of their legal persons of public law, including the central bank of that State; or these interests are paid by one of these States, authorities or legal persons;
(b) Such interest shall be paid in respect of a receivable or loan directly or indirectly guaranteed or insured or assisted by a Contracting State or by any other person financed or controlled directly or indirectly by a Contracting State.
4. The term "interest" refers to the income of receivables of any kind, whether or not accompanied by mortgage guarantees or an interest clause in the debtor's profits, including income from public funds and borrowing obligations, including premiums and lots attached to these securities. Penalizations for late payment are not considered interest within the meaning of this article.
5. The provisions of paragraph 1 shall not apply where the beneficial owner of the interest, a resident of a Contracting State, carries on in the other Contracting State in which the interest arises, i.e. a business activity by means of a permanent establishment located therein, or an independent profession by means of a fixed base located therein, and the interest-generating debt is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
6. Interest shall be deemed to arise from a Contracting State where the debtor is a resident of that State. However, where the debtor of interest, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed base for which the debt giving rise to the payment of interest has been contracted and which bears the burden of such interest, such interest shall be deemed to arise from the State where the permanent establishment or fixed base is located.
7. Where, because of special relations between the debtor and the beneficial owner or between the debtor and the other person maintain with third persons, the amount of interest, taking into account the debt for which they are paid, exceeds the amount agreed upon by the debtor and the beneficial owner in the absence of such relations, the provisions of this Article shall apply only to the latter amount. In such cases, the surplus portion of the payments shall be taxable in accordance with the laws of each Contracting State and taking into account the other provisions of this Convention.
8. The provisions of this Article shall not apply if the principal objective or one of the principal objectives of any person involved in the creation or assignment of the receivable under which the interest is paid is to take advantage of this Article by means of that creation or assignment.
Article 12
Claims
1. Royalties from a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State if that resident is the beneficial owner of the royalties.
2. However, such royalties are also taxable in the Contracting State in which they arise and according to the law of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10% of the gross amount of the royalties.
3. The term " royalties" used in this article means remuneration of any kind paid for the use, or concession of use, of a copyright on a literary, artistic or scientific work, including film films, or films or bands used for radio or television programming, a patent, a trademark or a trade, a drawing or a model,
4. The provisions of paragraph 1 shall not apply where the beneficial owner of the royalties, a resident of a Contracting State, exercises in the other Contracting State in which the royalties arise, i.e. a business activity by means of a permanent establishment located therein, or an independent occupation by means of a fixed base located therein, and that the property generating royalties is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
5. The royalties shall be deemed to arise from a Contracting State when the debtor is a resident of that State. However, where the debtor of royalties, whether or not a resident of a Contracting State, has in a State a permanent establishment, or a fixed base, for which the obligation giving rise to the payment of royalties has been contracted and which bears the charge of such royalties, such royalties are considered to be from the State where the permanent establishment or fixed base is located.
6. Where, because of special relations between the debtor and the beneficial owner or between the debtor and the other person maintain with third persons, the amount of royalties, taking into account the benefit for which they are paid, exceeds the amount agreed upon by the debtor and the beneficial owner in the absence of such relations, the provisions of this section apply only to the latter amount. In such cases, the surplus portion of the payments shall be taxable in accordance with the laws of each Contracting State and taking into account the other provisions of this Convention.
7. The provisions of this section shall not apply if the principal purpose or purpose of any person involved in the creation or assignment of the rights under which royalties are paid is to take advantage of this section by means of such creation or assignment.
Article 13
Capital gains
1. (a) The gains from the alienation of real property referred to in Article 6 shall be taxed in the Contracting State where such real property is located.
(b) Gains derived from the alienation of shares, shares or other rights in a corporation, trust or comparable institution, the assets or properties of which are constituted for more than 50% of their value, or derive more than 50% of their value, directly or indirectly by the interposition of one or more other comparable corporations, trusts or institutions, of real property referred to in Article 6 and located in a Contracting State or of taxable rights For the purposes of this provision, real property affected by such a corporation shall not be taken into account in its own industrial, commercial or agricultural operation or in the exercise by it of an independent profession.
2. The gains from the alienation of movable property that are part of the assets of a permanent establishment that a business of a Contracting State has in the other Contracting State or of movable property that belong to a fixed base of which a resident of a Contracting State disposes in the other Contracting State for the exercise of an independent profession, including such gains from the alienation of that permanent establishment (ully or with the other Contracting State)
3. The gains from the alienation of property that are part of the assets of a business and that consist of vessels or aircraft operated by it in international traffic or in movable property assigned to the operation of such ships or aircraft shall be taxable only in the Contracting State where the effective management seat of the business is located.
4. The gains from the alienation of any property other than those referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the assignor is a resident.
Article 14
Independent occupations
1. The income derived by a resident of a Contracting State from a liberal profession or other independent activities shall be taxable only in that State; However, such income is also taxable in the other Contracting State in the following cases:
(a) if it has in the other Contracting State a fixed basis for the exercise of its activities; in that case, only the fraction of the income attributable to the fixed base shall be taxable in the other Contracting State;
or
(b) if the stay in the other Contracting State extends over a period or periods of a total period of 183 days in any twelve-month period beginning or acquiring during the fiscal year under review; in that case, only the fraction of the income derived from the activities carried out in that other State is taxable in that other State.
2. The term "liberal profession" includes independent scientific, literary, artistic, educational or educational activities, as well as independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
Article 15
Dependent professions
1. Subject to the provisions of Articles 16, 18, 19 and 20, wages, salaries and other similar remuneration that a resident of a Contracting State receives under an employee employment shall be taxable only in that State unless employment is exercised in the other Contracting State. If the employment is exercised, the remuneration received as such is taxable in that other State.
2. Notwithstanding the provisions of paragraph 1, the remuneration of a resident of a Contracting State in respect of an employee employed in the other Contracting State shall be taxable only in the first State if:
(a) the beneficiary stays in the other State for a period or periods not exceeding a total of 183 days during a period of twelve consecutive months beginning or acquiring during the fiscal year under review, and
(b) compensation shall be paid by an employer or on behalf of an employer who is not a resident of the other State, and
(c) the pay charge is not borne by a permanent establishment or a fixed base that the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration received by a resident of a Contracting State for an employee employment exercised on board a ship or aircraft operated in international traffic shall be taxable only in that State.
Article 16
Jetons of presence
1. The fortieth, presence tokens and similar remuneration that a resident of a Contracting State receives as a member of the board of directors or supervision of a corporation that is a resident of the other Contracting State may be taxed in that other State.
2. Salaries, salaries and other similar remuneration that a resident of a Contracting State receives as a senior management officer in a corporation that is a resident of the other Contracting State may be taxed in that other State.
Article 17
Artists and athletes
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State from his or her personal activities in the other Contracting State as an artist of the spectacle, such as a theatre, cinema, radio or television artist, or a musician, or as a sportsman, may be taxed in that other State.
2. Where the income of activities that an entertainer or a sportsperson exercises personally and in this capacity is attributed not to the artist or to the athlete himself but to another person, whether or not a resident of a Contracting State, such income shall be taxable, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State where the activities of the artist or athlete are carried out.
3. The provisions of paragraphs 1 and 2 shall not apply where income derived from personal activities by an entertainer or athlete is financed entirely or principally by public funds of a Contracting State, its local authorities, or their legal persons of public law; in such case, income derived from such activities carried out by artists or athletes shall be taxable only in that State.
Article 18
Pensions
Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State for an earlier job shall be taxable only in that State.
Article 19
Public salaries
1. (a) Salaries, salaries and other similar remuneration, other than pensions, paid by a Contracting State or one of its local authorities, or by one of their public legal persons to a natural person for services rendered to that State, community or legal person shall be taxable only in that State.
(b) However, such wages, salaries and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and if the natural person is a resident of that State and has its nationality without at the same time having the nationality of the first State.
2. (a) Pensions paid by a Contracting State or one of its local authorities or by one of their legal entities of public law, either directly or by drawing from funds they have constituted, to a natural person for services rendered to that State, community or legal person shall be taxable only in that State.
(b) However, such pensions shall be taxable only in the other Contracting State if the natural person is a resident of that State and has its nationality without at the same time having the nationality of the first State.
3. The provisions of Articles 15, 16, and 18 apply to salaries, salaries and other similar remuneration as well as to pensions paid for services rendered in the course of a business carried out by a Contracting State or one of its local authorities or by one of their legal persons of public law.
Rule 20
Students
The sums that a student or trainee who is, or who was immediately before going to a Contracting State, a resident of the other Contracting State and who resides in the first State for the sole purpose of pursuing his or her studies or training shall be paid to cover his or her maintenance, education or training expenses shall not be taxable in that State, provided that they arise from sources outside that State.
Article 21
Other income
1. The income elements of a resident of a Contracting State, wherever they arise, which are not dealt with in the preceding articles of this Convention shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income other than income derived from real property as defined in paragraph 2 of Article 6, where the beneficiary of such income, a resident of a Contracting State, carries on in the other Contracting State, either a business activity by means of a permanent establishment situated therein, or an independent occupation by means of a fixed base located therein, and that the right or right of ownership shall be In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
3. Where, because of special relationships between the person referred to in subsection 1 and another person, or that one or the other maintain with third persons, the amount of income referred to in the same subsection exceeds the amount that would be agreed upon in the absence of such relations, the provisions of this section shall apply only to the latter amount. In such cases, the surplus portion of income shall be taxable according to the laws of each Contracting State and taking into account the other provisions of this Convention.
4. Notwithstanding the provisions of paragraphs 1 and 2, the income elements of a resident of a Contracting State that are not dealt with in the preceding articles of this Convention and that come from the other State shall also be taxable in that other State.
5. The provisions of this Article shall not apply if the principal purpose or purpose of any person involved in the creation or assignment of the rights under which the income is paid is to take advantage of this Article by means of such creation or assignment.
Article 22
Elimination of double taxation
1. With regard to France, double taxation is eliminated as follows:
(a) Notwithstanding any other provision of this Convention, income that is taxable or taxable only in Kenya in accordance with the provisions of the Convention shall be taken into account in computing French tax when it is not exempted from corporate tax under French domestic law. In this case, Kenyan tax is not deductible from these revenues, but the resident of France is entitled, subject to the conditions and limits set out in (i) and (ii), to a tax credit attributable to French tax. This tax credit is equal to:
(i) for income not referred to in ii), the amount of the French tax corresponding to these revenues provided that the resident beneficiary of France is subject to Kenyan tax on the basis of these incomes;
(ii) for income subject to tax on corporations referred to in section 7, paragraph 2 of section 13 and section 21, and for income referred to in section 10, section 11, section 12, paragraph 1 of section 13, section 16, paragraphs 1 and 2 of section 17 and section 21, to the amount of tax paid in Kenya in accordance with the provisions of those sections; However, this tax credit cannot exceed the amount of the French tax corresponding to these revenues.
(b) (i) It is understood that the term "the amount of French tax corresponding to these revenues" used in (a) means:
- where the tax due to these revenues is calculated by applying a proportional rate, the proceeds of the amount of the net income considered by the rate that is actually applied to them;
― where the tax due to these revenues is calculated by applying a progressive scale, the proceeds of the amount of the net income considered by the rate resulting from the ratio of the tax actually due to the total net income taxable under French law and the amount of that overall net income.
(ii) It is understood that the term "tax amount paid in Kenya" used in (a) means the amount of Kenyan tax actually borne on a final basis on the basis of the income considered, in accordance with the provisions of the Convention, by the resident of France that is taxed on these incomes under French law.
2. With respect to Kenya, double taxation is eliminated as follows:
(a) where a resident of Kenya receives income from French sources, which, in accordance with the provisions of this Convention, is taxable only in France and is exempt from tax in Kenya, Kenya may apply the tax rate that would have been applicable if the income of French sources had not been exempted for the purposes of taxing that person's other income;
(b) where a resident of Kenya receives income from French sources, which, in accordance with the provisions of this Convention, is taxable in both States, Kenya grants a tax credit on the income tax of that person in an amount equal to the tax paid in France. However, this tax credit cannot exceed the share of Kenyan tax as determined before the credit was granted, which relates to income from France.
3. Each Contracting State retains the right to impose in accordance with its domestic legislation the income of its residents, whose taxation is attributed to the other Contracting State, but which are not taken into account in the tax base in that State, in cases where this double exemption results from a discrepancy of the income concerned.
Article 23
Non-discrimination
1. (a) Nationals of a Contracting State shall not be subject in the other Contracting State to any taxation or obligation relating thereto, which is other or heavier than those to which nationals of that other Contracting State are or may be subject to the same situation, particularly in respect of the residence. This provision also applies, notwithstanding the provisions of Article 1, to persons who are not residents of a Contracting State or both Contracting States.
(b) For the purposes of subparagraph (a), it is understood that a natural or legal person, partnership or association that is a resident of a Contracting State is not in the same situation as a natural or legal person, partnership or association that is not a resident of that State; regardless of the definition of nationality, even if legal persons, corporations and associations are considered to be nationals of the Contracting State of which they are residents.
2. The imposition of a permanent establishment that a business of a Contracting State has in the other Contracting State, or of a fixed base of which a resident of a Contracting State has in the other Contracting State for the exercise of an independent profession, is not established in that other State in a less favourable manner than the taxation of the enterprises or residents of that other State that exercise the same activity. This provision shall not be construed as requiring a Contracting State to grant personal deductions, deductions and tax reductions to the residents of the other Contracting State on the basis of the situation or family expenses that it grants to its own residents.
3. Unless the provisions of paragraph 1 of Article 9, paragraph 5 of Article 11, or paragraph 5 of Article 12 are applicable, interest, royalties and other expenses paid by an enterprise of a Contracting State to a resident of the other Contracting State shall be deductible, for the determination of the taxable profits of that undertaking, on the same terms as if they had been paid to a resident of the first Contracting State. Similarly, all debts of an enterprise of a Contracting State to a resident of the other Contracting State are, for the purposes of determining the taxable basis of that undertaking, deductible under the same conditions as if they were contracted by the resident of the first Contracting State.
4. The undertakings of a Contracting State, whose capital is wholly or partly, directly or indirectly, held or controlled by one or more residents of the other Contracting State, shall not be subject in the first State to any taxation or obligation relating thereto, which is other or heavier than those to which the other similar enterprises of the first State are or may be subject.
5. Tax exemptions and other benefits provided by the tax legislation of a Contracting State for the benefit of that State, its local authorities or their legal entities of public law whose activity does not have an industrial or commercial character apply in the same conditions, respectively, to the other Contracting State or its local authorities or to their legal entities of public law whose activity is identical or similar. Notwithstanding the provisions of paragraph 7, the provisions of this paragraph do not apply to taxes due in respect of services rendered.
6. The provisions of this section shall apply, notwithstanding the provisions of section 2, to taxes of any kind or denomination.
7. If a bilateral treaty or agreement to which the Contracting States are parties, other than this Convention, includes a non-discrimination clause or a clause of the most favoured nation, it is understood that such clauses are not applicable in tax matters.
Article 24
Friendly procedure
1. Where a person considers that the measures taken by a Contracting State or by the two Contracting States shall result in or result in taxation not in accordance with the provisions of this Convention, the person may, independently of the remedies provided by the domestic law of those States, submit his case to the competent authority of the Contracting State of which he is a resident or, if his case falls within paragraph 1 of Article 24, to that of the Contracting State of which he or she is a national. The case shall be submitted within three years after the first notification of the measure that results in taxation not in conformity with the provisions of the Convention.
2. The competent authority shall endeavour, if the claim appears to it to be justified and if it is not itself in a position to provide a satisfactory solution, to resolve the case by amicable agreement with the competent authority of the other Contracting State, with a view to avoiding taxation not in conformity with the Convention. The agreement shall be applied irrespective of the time limits provided by the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour by mutual agreement to resolve the difficulties or to dispel the doubts to which the interpretation or application of the Convention may take place. In particular, they may work together to attempt to agree on the same distribution of revenues between the associated companies referred to in Article 9. They may also work together to eliminate double taxation in cases not provided for in the Convention.
4. The competent authorities of the Contracting States may communicate directly with each other, including within a joint commission composed of these authorities or their representatives, with a view to reaching an agreement as indicated in the preceding paragraphs of this Article.
5. Notwithstanding any other bilateral treaty, agreement or convention to which Contracting States are parties, disputes relating to taxation between Contracting States (including disputes relating to the application of the Convention) shall be settled only in accordance with the provisions of that article unless the competent authorities decide otherwise.
Rule 25
Exchange of information
1. The competent authorities of the Contracting States shall exchange the information likely to be relevant to the application of the provisions of this Convention or for the administration or application of the domestic law relating to the taxation of any kind or denomination perceived on behalf of the Contracting States, their political subdivisions or their local authorities, to the extent that the taxation it provides is not contrary to the Convention. The exchange of information is not restricted by sections 1 and 2.
2. The information received under paragraph 1 by a Contracting State shall be kept secret in the same manner as the information obtained under the domestic legislation of that State and shall be communicated only to the persons or authorities (including the courts and administrative bodies) concerned by the establishment or collection of taxes, by the procedures or prosecutions relating to such taxes, by the decisions on the remedies referred to in paragraph 1, or by the control of such taxes. These individuals or authorities only use this information for these purposes. They may disclose this information in public court hearings or judgments.
3. In no case shall the provisions of paragraphs 1 and 2 be construed as imposing on a Contracting State the obligation:
(a) take administrative measures derogating from its legislation, administrative practice or that of the other Contracting State;
(b) provide information that could not be obtained on the basis of its legislation or in the course of its normal administrative practice or that of the other Contracting State;
(c) provide information that would reveal a commercial, industrial, professional or commercial secret or information that would be contrary to public order.
4. If information is requested by a Contracting State in accordance with that Article, the other Contracting State shall use the powers available to it to obtain the information requested, even if that other State may not need it for its own tax purposes. The obligation contained in the previous sentence is subject to the limitations provided for in paragraph 3, but in no case may these limitations be construed as allowing a Contracting State to refuse to disclose information solely because it does not have an interest in it in the national context.
5. In no case shall the provisions of paragraph 3 be construed as permitting a Contracting State to refuse to disclose information solely because the information is held by a bank, other financial institution, an agent or a person acting as an agent or trustee or because that information relates to the ownership of a person.
Rule 26
Members of diplomatic missions
Consular
1. The provisions of this Convention shall not affect the tax privileges enjoyed by members of diplomatic missions, members of consular posts and members of permanent delegations to international organizations under either the general rules of international law or the provisions of special agreements.
2. Notwithstanding the provisions of Article 4, any natural person who is a member of a diplomatic mission, a consular post or a permanent delegation of a Contracting State located in the other Contracting State or in a third State shall be considered for the purposes of the Convention as a resident of the accrediting State provided that he or she is subject to the same obligations in respect of taxes on the whole of his or her resident assets.
3. The Convention does not apply to international organizations, their organs or officials or to persons who are members of a diplomatic mission, consular post or permanent delegation of a third State, when they are in the territory of a Contracting State and are not subject to the same tax obligations in any of the Contracting States in respect of their income and property as a whole.
Rule 27
Application methods
1. The competent authorities of the Contracting States may jointly or separately settle the terms and conditions of application of this Convention.
2. In particular, in order to obtain, in a Contracting State, the benefits provided for in Articles 10, 11 and 12, residents of the other Contracting State shall, unless the competent authorities otherwise have, submit a residence certificate form indicating in particular the nature and the amount or value of the revenues concerned, and comprising the certification of the tax services of that other State.
Rule 28
Miscellaneous provisions
if an agreement or agreement between Kenya and a Member State of the Organisation of Economic Cooperation and Development comes into force after the date of entry into force of this Convention and provides that Kenya exempts from tax any dividends, interest or royalties of Kenya, or limits the tax applicable to The competent authority of Kenya shall promptly inform the competent French authority that the conditions for the application of this paragraph have been met.
Rule 29
Entry into force
1. Each Contracting State shall notify the other of the completion of the procedures required for the implementation of this Convention. The latter will enter into force on the first day of the second month following the day on which the last notification was received.
2. The provisions of the Convention shall apply:
(a) in respect of income taxes collected by deduction to the source, taxable after the calendar year in which the Convention entered into force;
(b) in respect of income taxes that are not collected by deduction from the source, the related income, as the case may be, in any calendar year or year beginning after the calendar year in which the Convention entered into force;
(c) in respect of other taxes, taxations that will arise after the calendar year in which the Convention entered into force.
Rule 30
Denunciation
This Convention shall remain in force indefinitely, but each of the Contracting States may denounce it, until 30 June inclusive of any calendar year beginning after a period of five years after the date of entry into force of the Convention, by written notification transmitted, the diplomatic channel, to the other Contracting State. In this case, the Convention will no longer apply:
(a) in the case of Kenya:
(i) in respect of income taxes collected by deduction to the source, amounts collected or paid to non-residents effective 1 January of the calendar year following that in which the denunciation was notified;
(ii) in respect of other income taxes for the taxation year in the year following the year in which the denunciation has been notified and for subsequent years;
(b) in the case of France:
(i) in respect of income taxes collected by deduction to the source, taxable after the calendar year in which the denunciation has been notified;
(ii) in respect of income taxes that are not collected by deduction from the source, the related income, as appropriate, in any calendar year or in any fiscal year beginning after the calendar year in which the denunciation has been notified;
(iii) in respect of other taxes, taxations that will arise after the calendar year in which the denunciation has been notified.
In faith, the undersigned, duly authorized to do so, have signed this Convention.
Done in Nairobi on 4 December 2007, in duplicate, in English and French, both texts being equally authentic.
For the Government
of the French Republic:
Elisabeth Barbier,
Ambassador of France
Kenya
For the Government
of the Republic of Kenya:
Amos Kimunya,
Minister
Finance
P R O T O C O L E
At the time of the signing of the Convention between the Government of the French Republic and the Government of the Republic of Kenya with a view to avoiding double taxation and preventing tax evasion and tax evasion in respect of income taxes, the Governments have agreed on the following provisions which are an integral part of the Convention.
1. With respect to subparagraph 3 (a) of section 2, the wage tax is governed by the provisions of the Convention relating to business profits or independent professions, as the case may be.
2. With regard to subparagraph 1 (b) of Article 3, it is understood that the departments of Outre-Mer of the French Republic are: Guadeloupe, Martinique, Guyana and Réunion.
3. With respect to Article 7 (1), it is understood that, if a business of a Contracting State sells goods or goods identical to or similar to those sold by a permanent establishment, or carries out activities of a similar or similar nature to those of the permanent establishment, the profits from such sales or the exercise of such activities may be attributed to the permanent establishment if it is shown that such profits are in relation to the activities of the permanent establishment.
4. With respect to section 7, paragraph 3, the amount of expenditures for the purposes of the permanent establishment to be considered must be the amount actually exposed and supported by supporting evidence. However, it is recognized that, with respect to the general administrative costs incurred by the company's headquarters, it is appropriate to take into account a proportional share of these costs on the basis of the ratio between the turnover of the permanent establishment and that of the enterprise as a whole.
5. The provisions of the Convention do not prevent Contracting States from applying the provisions of their domestic legislation relating to sub-capitalization.
6. Each Contracting State retains the right to impose in accordance with its domestic legislation the income of its residents, whose taxation is attributed to the other Contracting State, but which are not taken into account in the tax base in that State, in cases where this double exemption results from a discrepancy of the income concerned.
Done in Nairobi on 4 December 2007, in duplicate, in English and French, both texts being equally authentic.
For the Government
of the French Republic:
Elisabeth Barbier,
Ambassador of France
Kenya
For the Government
of the Republic of Kenya:
Amos Kimunya,
Minister
Finance
Done in Paris, November 11, 2010.
Nicolas Sarkozy
By the President of the Republic:
The Prime Minister,
François Fillon
Minister for Foreign Affairs
and European,
Bernard Kouchner
