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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
Updated
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DT: Kenya: double taxation agreement, Article 14: Management fees

  1. Management fees arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
  2. Notwithstanding Article 8, management fees may also be taxed in the State in which they arise and according to the law of that State; but where such management fees are paid to a resident of the other Contracting State who is subject to tax there in respect thereof the tax so charged in the Contracting State in which the management fees arise shall not exceed 12½ per cent of the gross amount of the management fees arising there.
  3. The term `management fees` as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of a managerial, technical or consultancy nature.
  4. The provisions of paragraphs (1) and (2) of this Article shall not apply if the recipient of the management fees, being a resident of a Contracting State, has in the other Contracting State in which the management fees arise a permanent establishment with which the management fees are effectively connected. In such a case the provisions of Article 8 shall apply.
  5. If a resident of one of the Contracting States who receives management fees which arise in the other Contracting State and who is subject to tax in respect thereof in the first-mentioned Contracting State so elects for any year of assessment, financial year or year of income, the tax chargeable in respect of those management fees in the Contracting State in which they arise shall be calculated as if he had a permanent establishment in the last-mentioned Contracting State and as if those management fees were taxable in accordance with Article 8 as profits attributable to that permanent establishment. Provided that in no such case shall the expenses deductible in calculating the tax chargeable in respect of those management fees exceed 75 per cent of gross amount of those management fees arising in the last mentioned Contracting State.
  6. Management fees shall be deemed to arise in a Contracting State when the payer is the government of that State or a political subdivision thereof, a local authority or a resident of that State, and to the extent that they are attributable to services rendered in that State. Where, however, the person paying the management fees whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the management fees was incurred and the management fees are borne by that permanent establishment, then the management fees shall be deemed to arise in that Contracting State to the extent that they are attributable to services rendered in that State.