EAC decrys divergent tax rates

ARUSHA - Officials of the East African Community (EAC) have expressed concern over the differences in tax systems by partner states, saying this may derail the implementation of the Common Market. Speaking at a Public-Private dialogue on tax harmonization held recently in Arusha, officials expressed concern that there are large numbers of different tax rates across partner states as well as considerable differences in tax procedures. EAC Deputy Secretary General (Planning and Infrastructure) Alloys Mutabingwa pointed out that the differences in tax levies will undermine the vision of a common market which should have harmonized rules. “These differences, if allowed to persist will stifle the implementation of the Common Market and the enjoyment of the four freedoms granted under it,” Mutabingwa said. Freedoms under the much envisaged Common Market include; free movement of goods, free movement of persons, free movement of workers, right of establishment and residence, free movement of services and free movement of capital. Mutabingwa disclosed that the EAC in collaboration with German Technical Cooperation (GTZ) is undertaking a study on tax systems in the region. He said the objective of the study is to make a detailed analysis of the domestic tax laws of the partner states, identify the gaps, variations and recommend areas to be harmonized. The Vice Chairman of the East African Business Council (EABC) Keli Kiilu observed that the differences in taxation in the region have a negative impact on the regional integration process. He underscored the importance of active participation of the private sector in tax harmonization dialogues, adding that this would lead to tangible results, since the private sector consists of the tax payers. Ends

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EAC decrys divergent tax rates