Speaking during the official launch of the 2014 Tax Payers Week, Kandie said negotiations are on a high level that will see EAC countries come up with a harmonised tax regime, which will help in achieving a common market so as to create a level playing field in the EAC.
“The harmonisation will see a fully operational Single Customs Territory which was hampered by the absence of a harmonised tax regime,” she said.
She says some of the tax regimes in EAC countries create competition even as the EAC is pursuing a common market protocol.
“For example Tanzania has exempted tax in Tourism, and we have 16 percent tax, this is making it difficult for the EAC to market itself as a common market, hence the harmonised tax regime is important, “ she explained.
Taxes in the EAC vary with Uganda, Rwanda and Burundi levying VAT at a rate of 18 percent while Kenya and Tanzania charge 16 and 20 percent respectively.
On his part, Kenya Revenue Authority (KRA) Commissioner General John Njiraini explained that the approach would be to agree in terms of range where no one should go beyond or above the range.
“The ultimate goal is to have one legal regime however the negotiations are still ongoing, we also want to see harmonization min tax administration that include Auditing processes engaging the tax payers among others, I will be travelling on Friday in Kigali to the East African Business Council to continue with the talks,” he said.
This comes even as the EAC is yet to strike a deal with the European Union on the Economic Partnership Agreement (EPAs) (One month after the deadline) that will see EAC exports to the EU exempt from taxes.
However Kenya is the only loser in the region since it doesn’t fall under the Least Developed Countries (LDC) who are exempt from the taxes.