TAX ISSUES: East African States Agree To Fast Track Harmonization Of Tax Laws To Ease Free Movement Of Goods And Services

By PATRICK JARAMOGI

KAMPALA-SHIFTMEDIA- The East African partner states are set to roll out a robust harmonised tax policies starting next month, a senior government official has disclosed.
Director Economic Affairs Planning Ministry of Finance, Planning and Economic Development Kaggwa
Kaggwa said the EAC Council of Ministers had among others decided to fast track the development of the EAC local content policy.

This he said is intended to enhance the private sector participation in the regional integration agenda.
Kaggwa said given the growing global economic challenges, the EAC council of ministers agreed to review the trade policies in the region to help effectively address tax competition and Non-Tariff barriers.

He said though the EAC Customs Act was passed in 2014 it has faced many challenges regarding its implementation, especially regarding new areas in customs management.
“In this regard, the council of ministers agreed to review it, to meet the current developments,” Kaggwa said.

He was speaking during the Post East Africa Community Tax and Budget Dialogue 2021/22 organized by the Southern and Eastern Africa Trade Information SEATINI Uganda and Uganda Revenue Authority (URA)
Kaggwa noted with concern the issue of Non-Tariff barriers still present in the region. He highlighted the recent episode when Ugandan goods faced resistance in some EAC partner states.

“In order to mitigate this menace, the Sectoral Council on EAC regional coordination committee was asked to review and harmonise the COVID 19 testing charges and validity so as to allow smooth and free movement of goods, services and persons in the region,” he said.

On a similar note, Kaggwa said the council of ministers directed that Uganda and South Sudan harmonise the operation of the Nimule and Elegu One Border Stop Point by having all the relevant officials operating from the OBSP.

Abel Kagumire the Commissioner Customs Uganda Revenue Authority (URA) who represented the Commissioner General John Musinguzi Rusoke said as URA, they are ready to effectively implement whatever was recommended come July 1 2021.
“In line with article 32 of the Common Market Protocol that provides for harmonization of tax laws and policies, we shall remove tax distortions in order to facilitate free movement of goods, services and capital so as to promote investments in the community,” said Kagumire.
He said as EAC they are committed to attaining an upper and middle income status through a safe, and united political federation amidst harmonized tax laws.

He said though agriculture is the bedrock of the economy, services still dominate in tax collections.
He called for import substitutions if Uganda is to compete favorably in the region.

Study on EAC Tax Harmonization released

Presenting findings on the study of the EAC Tax harmonization progress, Jane Nalunga the Executive Director SEATINI Uganda said there was progress regarding the harmonization of tax laws in the region.
She said a study conducted by SEATINI Uganda and other partners revealed that the EAC partner states were slowly but surely harmonising their tax laws.
The study according to Nalunga revealed that Corporate Tax, Rental Tax, Excise Duty, Value Added Tax, Games and Sports Betting Taxes have been harmonised in most East African states.
“We found out that Uganda charges more fees than other EAC countries.
When it comes to direct taxes,” she told the participants during the virtual dialogue.

“In Uganda you start paying taxes when you earn 68$, while in Rwanda its $30, while in Kenya you starting paying when you earn $270 and Tanzania when you earn $160. In Uganda it is terrible, in fact we were proposing they raise it to at least $500 so that one can save some cash for spending,” she explained.

Nalunga said the issue of Corporate Tax, seems harmonised with Uganda having 30%, Tanzania and Rwanda 35%.
“But when it comes to capital Gains Tax, Kenya charges 5%, Tanzania 20% and 10% for residents. We need this harmonised, the Kenyan rate is very low,” she said.