EAC Customs Union triggers mixed reactions

Rwanda’s accession into the East African Community (EAC), which requires implementation of a common external tariffs and internal tariffs for extra regional imports and intra-regional trade, has attracted mixed reactions from the local business community. According to the EAC Customs Union protocol, products from a third party (a country outside EAC) attract a common tariff ranging from zero percent to 60 percent on sensitive products. For intra-regional trade, the import duty attracts between zero percent and 25 percent, with an intention of gradually phasing all the tariffs to zero percent by 2011. Products from outside the community will be charged on first point of entry (either Mombasa, Dar es Salaam) instead of entry in Kigali. A mini-survey by The Business Times shows that local traders, especially those in mateus are still have limited information about the customs union while others say it will means increased demand for their products. Elévanie Mukantabana, The Managing Director of La découverte, said that the new tax regime under the regional Customs Union will possibly favour the business community unlike before. “There are tax reductions which will definitely affect us positively. “We will also serve a large EAC market access with less trade barriers, which tax is part.” Mukantabana, an importer of cosmetics from Europe and other African countries revealed that she acquired agents in other EAC countries in order to take advantage of the favourable common taxes and wide market. “I expect to supply my agent in Uganda as I hope to seek for more across the region,” she explained One of the proprietors of Simba Supermarket, who spoke on conditions of anonymity, said that Rwanda joining the regional Customs Union will not only benefit local traders but also the consuming public. “The benefits will be a two-way traffic. Business will benefit from low taxes as well as the public. “The public should expect a drop in prices due to tax reductions.” He however expressed concerns over the procedure of tax payment. He said that it is not yet clear on how taxes will be paid. For the last two months, Rwanda Revenue Authority (RRA) has been educating taxpayers countrywide about the likely benefits and tax policy reforms of the EAC Customs Union. However, majority of the traders especially those in Mateus, the leading trading centre in Kigali town expressed ignorance and scepticism about the Customs Union. Mobile phone dealers, Hello Phone, said they had not received any training from RRA citing business demands that kept them too busy to attend any workshop. “We focus on earnings for a daily bread,” a trader only identified as Frank explained. However Wilson Ndibyoko, a wines and spirit dealer shifted the blame to the authorities saying that it had not curried out enough public campaign. “Many are not aware about what is going on. We will have to wait and see as we continue with our businesses,” he said. Julie Umutoni, the shop attendant at Divaá in the Union Trade Centre (UTC) was unaware about what is happening place but still optimistic that it is at the benefit the Rwandan economy and the region at large. “Basing on your explanation, I think the EAC Customs Union will benefit the entire country and the regional economy,” she explained. Ends

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EAC Customs Union triggers mixed reactions