The Double Taxation Convention (DBA) will contain an article in which the method of eliminating double taxation will be defined either by the tax-exempt method or by the credit method. In the absence of a stable head office, economic power may arise when a resident of one contracting state has, in the other State party, a dependant representative with the general authority to enter into contracts on behalf of the resident. This excludes situations in which activities are limited to the purchase of goods or goods for the foreign company in whose name it acts. It is an agreement between two or more countries to avoid double taxation and prevent income and capital tax evasion. In particular, it is avoided when countries enter into bilateral or multilateral agreements aimed at avoiding double taxation and preventing income tax evasion and capital taxes (double taxation agreements). In its judgment, the High Court of Kenya found that the constitutional claims were “a lack of merit”. In addition, the petition “did not provide details” on the liability argument and the economic arguments put forward by the petitioner were not justified. The respondents showed, to their satisfaction, that the Kenya Revenue Authority, the revenue management agency, had made contributions to revenue issues; The Attorney General`s Office, an office responsible for the government`s legal advice; and the firm that is part of the executive of the goverment. The involvement of all these institutions has shown responsibility and openness.
The crucial question in the High Court`s decision was whether the DBA had violated Kenya`s Constitution, which had been adopted without public participation and parliamentary scrutiny. The Legal Instruments Act 2013, which came into force on 25 January 2013, stipulates that a copy of a legal instrument must be presented to the National Assembly within seven days of publication by the cabinet secretary in charge of the relevant regulatory authority. While it is recognized that emerging countries, such as Kenya, need bilateral agreements to attract and encourage foreign direct investment, the Tribunal`s decision underscores the importance of due process and the rule of law. In particular, a number of instruments of the rule of law have been published in recent years, including VAT regulations in 2017, DBA with the United Arab Emirates and South Africa and other recent regulations such as money fund regulations.