NAIROBI, Kenya, Nov 21 – The impact of continued impact of smuggling on revenue collection remains one of the biggest trade in East Africa, according to tax bodies in the region.
The Commissioners General of the EAC Revenue Authorities who met in Nairobi underscored that smuggling remains a significant barrier to both revenue generation and societal safety.
They called for swift policy measures to address this, including tax harmonization, improved administrative strategies, and better enforcement.
“It was noted that revenue performance in the region continued to be negatively impacted by smuggling, increase in tax exemptions, expansion of the informal sector, cash economy and inadequate visibility of taxpayer transactions from both Customs and domestic revenue fronts,”read a joint statement by EAC tax bodies in part
Specifically, they advocated for uniform valuation procedures, stronger information sharing on exports, and the creation of an Intelligence and Surveillance Fusion Centre to tackle cross-border tax evasion and enhance regional security.
The informal sector, the expansion of cash-based economies, and the lack of visibility into taxpayer transactions both at Customs and the domestic revenue front were also identified as persistent challenges that hinder effective tax collection.
As part of their discussions, the Commissioners emphasized the need for a more comprehensive approach to address these issues.
Additionally, the meeting focused on the operationalization of the EAC Multilateral Double Taxation Agreement (DTA), which aims to eliminate tax barriers that hinder cross-border trade and investment.
Several authorities that have yet to ratify the DTA committed to fast-tracking the process, with a view to submitting it for approval by the EAC.
The Commissioners also encouraged the use of information exchange mechanisms to help recover outstanding tax arrears.
To further enhance regional tax cooperation, the meeting highlighted the importance of engaging with global tax forums.
Revenue Administrations were urged to consider domestic legislation that would allow them to benefit from existing double taxation agreements (DTAs) and the Global Forum’s Multilateral Convention on Assistance in Tax Matters (MAAC).
The Commissioners General encouraged member states that have not yet signed the MAAC to consider doing so, in order to strengthen cooperation and tax compliance across borders.
