The Czech Republic’s Lower House is reviewing a resolution to ratify the Double Taxation Agreement (DTA) with Kenya, signed on September 23, 2025.
As confirmed by Bloomberg Tax, on February 11, 2026, the Czech Chamber of Deputies accepted Resolution No. 105/0 for consideration, seeking to ratify the Double Taxation Agreement (DTA) with Kenya.
“The Czech Chamber of Deputies, Feb. 11, accepted for consideration Resolution No. 105/0, to ratify the DTA with Kenya, signed Sept. 23, 2025,” they reported.
The DTA aims to eliminate double taxation of income without creating opportunities for non-taxation or tax avoidance, including treaty shopping and applies to residents of one or both countries and covers taxes on income imposed by either state or local authorities.
“…intending to eliminate double taxation… without creating opportunities for non‑taxation or reduced taxation through tax evasion or avoidance (including through treaty‑shopping arrangements…),” read a section of the DTA
How Kenya is Set to Benefit from the Tax Deal
In Kenya, the treaty applies to income tax under the Income Tax Act and extends to any future taxes that are identical to or substantially similar to existing ones, while in the Czech Republic, it covers income tax for individuals as well as corporate income tax for legal entities.
Once approved, the treaty will prevent Kenyans from paying taxes twice on the same income earned in the Czech Republic and will clarify cross-border tax obligations, thereby facilitating trade, investment, and economic cooperation between the two nations.
“This Agreement shall apply to taxes on income imposed by the Contracting States, including taxes of a substantially similar character imposed in the future. It shall prevent double taxation for residents of either State and provide for the allocation of taxing rights on cross-border income between Kenya and the Czech Republic,” the DTA noted.
The Kenya–Czech DTA is a comprehensive tax treaty aligned with OECD standards. It:
- Clarifies taxing rights on cross-border income,
- Reduces double taxation,
- Introduces withholding caps,
- Establishes strong anti-abuse, information exchange, and tax‑collection cooperation mechanisms,
- And modernises tax coordination between Kenya and the Czech Republic.
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Allocation of Taxing Rights under the Kenya–Czech DTA
Business Profits (Art. 7): Profits are taxed only in the country of residence unless the enterprise has a permanent establishment (PE) in the other country. Only profits attributable to the PE may be taxed in the source state.
Income from Immovable Property (Art. 6): Income from property is taxed in the country where the property is located.
Dividends (Art. 10): Dividends may be taxed in both countries, but the country must cap withholding tax at a mutually agreed rate.
Interest (Art. 11): Interest income may be taxed in both states, with a capped withholding rate, and is exempt for certain government bodies.
Royalties (Art. 12) & Technical Service Fees (Art. 12A): Both are subject to shared taxing rights with capped withholding rates negotiated between the countries.
Capital Gains (Art. 13): Gains from immovable property are taxed where the property is located. Gains from PE property are taxable in the PE jurisdiction. Special rules apply to shares deriving value from immovable property.
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Employment Income (Art. 14): Taxable where employment is exercised, subject to the 183-day rule and employer PE conditions.
Other Income (Arts. 15–18): Directors’ fees, entertainers, sportsmen, pensions, and government service income follow standard OECD taxation patterns.
Elimination of Double Taxation (Art. 21): Each country must provide foreign tax credits for income taxed in the other state. Exempt income may be used to calculate tax progression.
Anti-Avoidance Provisions (Art. 27): Benefits are limited to “qualified persons” meeting ownership, business activity, or principal purpose tests. Treaty benefits are denied if one main purposes is to gain treaty advantages.
Exchange of Information (Art. 24): Broad information exchange, including banking data, is required for tax enforcement and judicial purposes.
Assistance in Collection of Taxes (Art. 26): Both countries must assist in recovering tax debts, subject to safeguards such as public policy and administrative burden.
Entry into Force and Termination: The treaty enters into force once both countries issue diplomatic notifications, effective January 1 of the following year. It can be terminated after five years with six months’ notice.
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