notification no. 11/2018 f. no. 503/01/2005/ftd ii / so 731 e

MINISTRY OF FINANCE (Department of Revenue) NOTIFICATION New Delhi, the 19th February, 2018 (INCOME TAX) S.O. 731(E).—Whereas, an Agreement between the Government of the Republic of India and the Government of the Republic of Kenya for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was signed at Nairobi, Kenya on the 11th July, 2016 (hereinafter referred to as the said Agreement); 20 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)] And whereas, the said Agreement entered into force on the 30th day of August, 2017, being the date of the later of the notifications of the completion of the procedures required by the respective laws for entry into force of the said Agreement, in accordance with paragraph 2 of Article 31 of the said Agreement; And whereas, sub-paragraph (a) of paragraph 3 of Article 31 of the said Agreement provided that the provisions of the said Agreement shall have effect in India in respect of income derived in any fiscal year beginning on or after the first day of April following the calendar year in which the said Agreement enters into force; Now, therefore, in exercise of the powers conferred by sub-section (1) of section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that all the provisions of said Agreement, as annexed hereto shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF KENYA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF KENYA DESIRING to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to promoting economic cooperation between the two countries, HAVE AGREED as follows: ARTICLE 1 PERSONS COVERED This Agreement shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 TAXES COVERED 1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied. 2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income including taxes on gains from the alienation of movable or immovable property, and taxes on the total amounts of wages or salaries paid by enterprises. 3. The existing taxes to which the Agreement shall apply are, in particular: (a) in the case of India: the income-tax, including any surcharge thereon (hereinafter referred to as “Indian tax”); ¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 21 (b) in the case of Kenya: taxes on income chargeable under the Income Tax Act (Cap. 470) (hereinafter referred to as “Kenyan tax”). 4. The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws. ARTICLE 3 GENERAL DEFINITIONS 1. For the purposes of this Agreement, unless the context otherwise requires: (a) the term “India” means the territory of India and includes the territorial sea and air space above it as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea; (b) the term “Kenya” means all territory of Kenya in state boundaries, including internal and territorial waters and also Special Economic Zone and Continental Shelf, and all installations erected thereon as defined in the Continental shelf Act over which Kenya exercises its sovereign rights for the purpose of exploiting natural resources of the sea bed, its subsoil and superjacent waters, in accordance with the international law; (c) the terms “Contracting State” and “the other Contracting State” mean India or Kenya as the context requires; (d) the term “person” includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; (e) the term “company” means anybody corporate or any entity which is treated as a body corporate for tax purposes; (f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (h) the term "competent authority" means: (i) in the case of India, the Finance Minister, Government of India, or his authorized representative; (ii) in the case of Kenya, the Cabinet Secretary responsible for Finance or his authorized representative; (i) the term "national" means: (i) any individual possessing the nationality of a Contracting State; (ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; (j) the term “tax” means Indian or Kenyan tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty or fine imposed relating to those taxes; 22 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)] (k) The term “fiscal year” means: (i) in the case of India: the financial year beginning on the 1st day of April; (ii) in the case of Kenya: the year of income beginning on the 1st day of January. 2. As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies and any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State. ARTICLE 4 RESIDENT 1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: (a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him. If he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);