NAIROBI, Kenya – Kenya and Belgium have solidified their economic partnership by signing an Agreement for the Avoidance of Double Taxation (DTA). The landmark agreement, inked at the National Treasury Building in Nairobi, is poised to create a more favourable environment for trade and investment flows between the two countries.

The National Treasury officially announced the signing on Tuesday, September 30, 2025, emphasizing its role in deepening bilateral economic and investment relations. This DTA is a crucial instrument designed to prevent the same income from being taxed twice in both Kenya and Belgium, thereby reducing the tax burden on investors and businesses.

Understanding the Impact of a Double Taxation Agreement

A Double Taxation Agreement is an international treaty between two countries that aims to prevent the imposition of similar taxes in both jurisdictions on the same income or capital. For Kenya and Belgium, this agreement will typically cover:

• Elimination of Double Taxation: It provides mechanisms, such as tax credits or exemptions, to ensure that income earned by a resident of one country from sources in the other country is not taxed twice.
• Tax Certainty: Businesses and investors gain clarity on their tax obligations, reducing uncertainty and making cross-border investments more predictable and attractive.
• Prevention of Fiscal Evasion: DTAs often include provisions for the exchange of information between tax authorities, which helps in combating tax evasion and avoidance.
• Promotion of Trade and Investment: By reducing tax barriers and providing a stable tax environment, DTAs encourage foreign direct investment (FDI) and facilitate the movement of goods, services, and capital.

For Kenyan businesses looking to expand into Belgium, or Belgian companies considering investments in Kenya, the DTA will streamline tax processes and potentially lower operational costs. This could lead to increased capital inflows, technology transfer, and job creation in Kenya.

Key Provisions and Benefits for Kenya

While the full details of the specific DTA between Kenya and Belgium are yet to be publicly disseminated, such agreements typically include provisions on various types of income, including:

• Business Profits: Rules for taxing profits of enterprises operating in both countries.
• Dividends, Interest, and Royalties: Reduced withholding tax rates on these income streams, making it more attractive for companies to repatriate profits or license intellectual property.
• Capital Gains: Provisions on how gains from the sale of property or shares are taxed.
• Employment Income: Rules for individuals working in one country while being a resident of the other.

The signing of this DTA aligns with Kenya's broader strategy to attract foreign investment and integrate further into the global economy. By offering a more predictable and favourable tax regime, Kenya aims to position itself as a preferred investment destination for European businesses.

Analysts have noted that this development could significantly influence near-term public debate and policy execution. Stakeholders are now urging the National Treasury to provide clarity on the timelines for the agreement's implementation, potential costs associated with its administration, and any safeguards put in place to protect domestic industries and revenue streams.

The agreement is expected to undergo ratification processes in both countries before it fully comes into force. Once effective, it will serve as a cornerstone for enhanced economic cooperation, fostering a more robust and mutually beneficial relationship between Kenya and Belgium.