EABC revives push for harmonized regional tax policy

By Steve Umidha

The East African Business Council (EABC) is urging for tax regime harmonization among the East Africa Community (EAC) member states if they are to improve ease of doing business and attract regional investments.

Bothered by the “very slow pace of harmonization at the policy level,” private sector experts on tax matters from EAC Partner States have been meeting virtually on Trade & Investment Opportunities in East Africa Beyond COVID-19 conference in a technical working group meeting to revive their engagement on issues of tax harmonization.

The countries including Kenya, Rwanda and Tanzania are ranked in the top 7 by “Where to Invest in Africa” 2019 report of the Rand Merchant Bank (RMB).

“Addressing the cost of doing business such as energy and infrastructure issues and ensuring stable human capital development will entice investors to come to East Africa,” he said.

EABC Chief executive, Peter Mutuku Mathuki urged EAC Partner States to put in place a favorable business environment in the region – in a forum that attracted Investment Promotion Authorities, Senior Government Officials, Industry Champions, Development Partners and Investors from the region and beyond.

Previously EAC Partner States agreed to establish free trade (or zero duty imposed) on goods and services amongst themselves and agreed on a common external tariff (CET), whereby imports from countries outside the EAC zone are subjected to the same tariff when sold to any EAC Partner State.

So far, only Customs duties have been harmonized by setting a common external tariff (CET) for imports into Kenya, Uganda, Tanzania, Rwanda and Burundi.

The EAC offers a market of more than 177.2 million people with a combined GDP of about USD200 billion. “Ethiopia is urged to join the EAC bloc along with DRC for a bigger regional market,” said Mathuki.

The speakers representing Investment Promotion Agencies in Kenya, Tanzania, Rwanda, Ethiopia, Uganda and Zanzibar highlighted the region’s priority investment sectors including tourism, agriculture and agribusiness, infrastructure, manufacturing, energy, mining and metals, oil and gas among others.

A study by PriceWaterhouseCoopers (PwC) on the impact of EAC excise tax harmonization recommends that in order to move faster on the matter, the EAC partners need to focus on key areas including procedures and administration, classification rules and definitions and remission schemes.

Guracha Adi, General Manager of Investor Services at Kenya Investment Authority (KenInvest) said the Government of the Republic of Kenya is set to inject up to Sh3 billion to expand the manufacturing sector.

Kenya Investment Authority also highlighted the manufacturing of construction materials and equipment, agro-processing, leather processing and heavy industries production as some of the key investment opportunities available in Kenya.

The Virtual Conference which has been running this week focused on Non-Tariff Barriers (NTBs) continuing to hinder cross-border trade due to different measures on COVID-19 in the region and urged for improving regional coordination and harmonization of measures on COVID-19 for economic resilience and growth.