Burundi's Senate (upper house of parliament) reportedly approved the pending East African Community (EAC) income tax treaty on 17 June 2020. The treaty was approved by the National Assembly (lower house) on 3 June. The EAC tax treaty was signed by Burundi on 30 November 2010 along with other EAC Members Kenya, Rwanda, Uganda, and Tanzania.
Taxes Covered
The treaty covers:
- In Burundi, the tax on income chargeable in accordance with the provisions of the income tax acts of 1963.
- in Kenya, the income tax chargeable in accordance with the provisions of the Income Tax Act, Cap. 470;
- In Rwanda, the income tax chargeable under the Law No. 16/2005 of 18/08/2005 on direct taxes on income and the tax on rent of immovable property as provided under Law No. 17/2005 establishing the source of revenue for districts and towns and its management;
- in Uganda, the tax on income chargeable under the Income Tax Act, CAP 340; and
- in Tanzania, the tax on income chargeable under the Income Tax Act, CAP 332.
Service PE
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other engaged personnel in a Contracting State if the activities continue for the same or connected project for a period or periods aggregating more than 6 months within any 12-month period.
Withholding Tax Rates
- Dividends - 5%
- Interest - 10%
- Royalties - 10%
- Management or Professional Fees for any services of a technical, managerial, professional or consultancy nature - 10%
Capital Gains
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
- Gains from the alienation of immovable property situated in the other State; and
- Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State.
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State
Double Taxation Relief
The treaty includes provisions for the application of the credit method for the elimination of double taxation.
Entry into Force and Effect
The treaty will enter into force once the last of the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.