To ease trade and spur economic development in the region, double taxation should be scrapped; the private sector has appealed. Most investors in the region describe double taxation as unrealistic, restrictive and eating into their profits.
To ease trade and spur economic development in the region, double taxation should be scrapped; the private sector has appealed. Most investors in the region describe double taxation as unrealistic, restrictive and eating into their profits.
The business community argued that since East Africa Community (EAC) is at the stage of customs union, there is no essence of being taxed more than once.
"In our bid to avail airtime cards to our clients all over East Africa through our roaming product, we pay taxes here and when the cards reach the destination country they are again taxed,” MTN’s chief executive officer, Themba Khumalo said.
There is lack of harmonisation of taxes in the East African countries today, he added. Most cases companies pay VAT twice or thrice depending on the number of countries the products are sold.
The outcry was made during an interaction between East African Council ministers and members of the Rwanda private sector in Gokondo over the weekend.
The Secretary General of the Private Sector Federation Emmanuel Hategeka hosted the ministers. They included Eriya Kategaya (Uganda), Ibrahim Msabaha (Tanzania), Rhamadhani Karenga (Burundi) and on the government side, the minister in charge of regional integration Rosemary Museminari.
The officer in charge of customs union in East Africa, Karanja said that the target is that by the year 2009 a free trade area will be in existence among the east African countries. There are also decentralised customs unions among some East African states to handle trade issues jointly.
"Partner states deal with policies and guidelines on taxes jointly” Karanja said. The managing director of Bralirwa Platenga Door appealed to the East African states to speed up the project of one stop boarder post in order to reduce the delays that hamper trade among member states.
One Stop Boarder Post (OSBP) is a component of the East African Trade and Transport Facilitation project (EATTF) funded by the World Bank.
The project is intended to simplify procedure in customs by minimising and eliminating duplication that results from the officious traditional two-stop borders currently existing along East African countries’ borders. Karanja said all member states will have to harmonise their tax structures to three-bands.
That, in EAC, raw materials are zero-rated, intermediate goods are charged only 10 per cent whereas import duty on sensitive goods like maize, rice and textiles are charged 25 per cent to protect local industries. In his observation, trade in EAC is only liberalized up to 80 per cent.
"In EAC, we plan for a fully fledged Free Trade Area (FTA) by 2009,” he said.
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