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Double tax relief is claimed by the individual in a personal tax return. Therefore, double tax has no payroll implications.

Domestic double tax relief

The Kenyan Income Tax Act, s 16(2)(c) allows taxpayers to deduct from their income tax certain foreign income tax (or tax of a similar nature) paid on income charged to tax in a country outside Kenya.

This Foreign Tax Credit (FTC) must relate to the income taxed in Kenya and is only allowed to the extent that the foreign tax is payable in respect of, and is paid out of, income deemed to have accrued in, or to have been derived from, Kenya.

This restricted tax credit is because Kenya has first taxing rights over income sourced in Kenya (the source of employment income is generally the place where an employee physically performs their duties).

Employment income is sourced in Kenya if it accrues in, or derives from, Kenya. Link here.

Double tax treaties

Kenya has agreed to 15 Double Taxation Agreements. Only a few of these are in force and several treaties