Tax Reforms To Protect Investors Within East Africa

The Uganda-Kenya contest for Migingo has always been about who owns the waters, fish, land; and who should seek the other's consent before engaging in activities around the Island. According to post-budget statements made by the different states, East Africa may no longer have space for such small fights.

"To you our brothers and sisters in East African, from today, you will be treated like Kenyans. You can now work, do business, own property, farm, marry and settle in Kenya. You will only need your identity card. We make this commitment with no condition for reciprocity but our desire for deeper regional integration." Those were the words of H.E Uhuru Kenyatta during his speech at the Kenyan Budget reading.

At the very end of the last century, we saw efforts to revive the East African Community (EAC) which had survived a decade before its collapse in 1977.

When the partner states signed the treaty for the EAC revival, a roadmap leading to a political federation was also drawn. The brief of it was a common market first, a monetary union (one currency) and finally one political federation (one country).

The member states are taking the EAC seriously; they are now issuing EAC passports; the EAC anthem is now sung in schools and at government functions. Our new tax laws define a Ugandan Citizen to include a citizen of any of the EAC partner states.

The establishment of the EAC common market meant the gradual removal of "internal import" tariffs over the years which has been achieved. As far as the EAC is concerned goods manufactured in Kenya for example coming into Uganda can no longer be subjected to import duty. The principle is that goods made in any of the other member states be treated just the same like similar goods made at home in terms of tariffs. The fundamental is to apply the same taxes at the same rates to the same goods.

And from the courts, there is even a determined case against the Uganda Government (in favour of BAT) for collecting an excise duty amount from cigarettes made in Kenya that is different (higher) than that imposed on those cigarettes manufactured in Uganda. Uganda's actions undermined the good steps and intentions of the EAC becoming one country in future.

On top of removing internal barriers, member states agreed to having Common External Tariffs (CET) which are import duty rates applicable to products originating outside the EAC.

In the budget speech that was delivered by the Finance Minister this June, the...

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