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HMRC internal manual

Double Taxation Relief Manual

Kenya: Management fees

Management fees arising in Kenya and paid to a resident of the United Kingdom may be taxed in both countries. The tax chargeable in Kenya is limited to 12 per cent of the gross fees if the United Kingdom resident is subject to tax (see INTM162020) in the United Kingdom on those fees.

If the recipient has a permanent establishment in Kenya with which the management fees are effectively connected, or if he elects under Article 14(5) to be treated as though he had such an establishment, the Kenyan tax chargeable on those fees will be calculated as if they were profits attributable to that permanent establishment and taxable under Article 8. Where such an election is made, the agreement provides that the expenses deductible in calculating the Kenyan tax chargeable on the fees shall not exceed 75 per cent of the gross amount arising (Article 14 as amended by Articles 2 and 3 of the Protocol).

Whether or not the United Kingdom recipient elects to have Kenyan tax calculated in accordance with Article 14(5), the United Kingdom measure of the doubly taxed income for tax credit relief purposes will be the net management fees after deduction of expenses attributable to those fees (INTM168062).