The East African Business Council (EABC) has called on countries in the region to eliminate discriminatory taxes and expedite the harmonisation of domestic taxes in the East Africa Community (EAC) to attract more cross-border and foreign direct investments.Speaking during a recent online event following the release of the preliminary findings of a study on discriminatory taxes and harmonisation of excise duties in the EAC, John Kalisa, EABC CEO, highlighted the impact of unharmonised taxes on the region, saying it simply frustrated the movement of goods, services, service suppliers and workers.“There are other repercussions, including an unlevel playing field for business and difficulties in marketing the EAC bloc as a single investment destination,” he said.Speaking during the same event, Paveen Mbeda, Trademark Africa head of public-private dialogue and export capability, said it was essential for countries to ensure tax systems were aligned if the region was to unlock the full potential of the EAC bloc and drive sustainable and equitable growth.According to the study’s preliminary findings, the excise duty rates across the EAC region are generally considered on the high side and have a ripple effect on the cost of doing business. Findings show that the Electronic Tax Stamp (ETS) is high for manufacturers. For example, ETS has been introduced on carbonated soft drinks in Tanzania since August 2019 at $3.60 per 1000 stamps. Later, this was fixed at TZS 8 082.62(approx. $3.50) per 1000 stamps. As a result, businesses have been incurring significant additional costs to manufacture, resulting in loss of margins and difficulty in supporting their working capital requirements.The study has recommended that excise duty on all non-harmful goods and services, such as telecommunication products/services as well as financial services, be removed.Non-tariff barriers remain one of the biggest stumbling blocks and barriers to trade among EAC countries. But, said Kalisa, East Africa was still the best-performing economic region in Africa despite the global shocks and challenges it faced.According to economist, Dr Pantaleo Joseph Kessy of the East Africa Community Secretariat, efforts for an EAC single currency are on track and it is set to be in place by no later than 2031.“The EAC Secretariat is currently updating the provision of the double taxation agreement, which is expected to be ready for ratification by the end of the year.”Calling on East African countries to adhere to its Customs Union Protocol that states “no partner states shall impose, directly or indirectly, on the products of other partner states any internal taxation of any kind over that imposed, directly or indirectly, on similar domestic products”, Kalisa said much could be achieved, not only to increase intra-regional trade but intercontinental trade, if the region could remove discriminatory taxes and address the non-tariff barrier.
