OPINION: Why EAC tax harmonization remains a challenge

The recent 20th anniversary of the East African Community (EAC) was marked by a High Level Business and Investment Summit, hosted by the East African Business Council (EABC).

In his keynote opening speech Hon Professor Kabudi, Tanzania’s Minister for Foreign Affairs and East African Cooperation, cited Mwalimu Nyerere’s view that “East Africa integration is a necessity not a choice”! But, Hon Kabudi cautioned that to make the integration aspiration achievable it had to be people centred, and private sector driven.

Whilst the EAC has come a long way, and indeed is still the most cohesive regional economic community in Africa, there was acknowledgement that it should have progressed further – for example, intra-EAC trade currently stands at only around 12 per cent, whereas in the EU it is over 70 per cent.

Greater integration both at the EAC level, and going forward at the Africa level (courtesy of the Africa Continental Free Trade Area (AfCFTA), is seen as a key enabler in relation to industrialisation aspirations.

Some challenging questions were raised: Why not make it easier to fly within the region?

Why is it so expensive to roam? Why not respect each other’s standards? And importantly, can we not accept an approach on regulation (for example, local content) or taxation (for example, excise duty) where “local” is defined to be East African? Certainly, in the long term protective measures do not help as they tend to work against enhanced efficiency and ultimately competitiveness.

Source: The Citizen

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark East Africa.

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