The East African Business Council (EABC) has this month commissioned a study on the harmonisation of excise duty in the region to bolster trade among member states.
The differing tax systems hamper the enjoyment of free movement of goods, services, capital and workers and thus adversely affect the East African Community (EAC)-intra-trade.
For years now, East Africa’s intra-trade has not been promising, remaining static at 15 per cent of the total trade with the rest of the world, according to official data.
Disclosing the new development, trade and policy advisor with the EABC, Adrian Njau, said the consultant will look at excise duty across the region, seek the member states’ views and come up with recommendations on how to go about it.
“We have decided to start with the excise duty because it is the one which is more challenging (compared to other forms of taxes),” Adrian Njau as quoted by The Citizen.
He disclosed that after the harmonisation of excise duty, Value Added Tax (Vat) will be the next target per the EAC roadmap. Thereafter, he added, income tax and tax incentives will follow, respectively.
“Given that in 2018, the EAC partner states adopted the EAC policy for the harmonisation of domestic taxes, it is high time we expediently commenced the harmonisation of taxes,” Mr Njau in his presentation.
He further recommended for the partner states to enhance the human and financial resources of the fiscal and monetary department at the EAC secretariat to enable the steering of the tax harmonisation process.
In the course of the domestic taxes harmonisation process, the EAC partner states needed to involve the private sector actively.
“The private sector should start harmonising their positions with regard to the harmonisation of domestic taxes,” urged Mr Njau.
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