Promotion of Tax Harmonisation in the EAC
Enhancing Resource Mobilisation through Harmonised Taxes and Procedures
Cooperation between EAC and GIZ
In a Common Market tax rates become an important element for the intraregional competitiveness of enterprises and economies. Member countries may engage in harmful competition to increase their competitiveness by lowering taxes. This might not only harm their fellow members but also erode the tax base of the entire community. Hence, insufficiently harmonised tax legislations can hinder the regional integration process. The design of common tax laws and directives is complicated due to the diversity of administrative traditions in the EAC Partner States.
Our Approach and Services
The activities with the EAC are based on a comprehensive study on tax systems in the Partner States and a jointly agreed annual work plan.
Our support on regional tax harmonisation focuses on the following areas:
Our services include:
Contributions and Achievements
GIZ supports the relevant processes in the EAC organs on tax harmonisation and provides inputs for the implementation of regional decisions on the national level.
We supported the set up of technical working groups on taxation which was a prerequisite for initiating the harmonisation process especially in the area of VAT and Excise Duties.
We contributed to the adoption of the Agreement of Double Taxation Avoidance (DTA) by the Ministries of Finance of the EAC Partner States in 2011. The DTA will help to reduce double taxation and prevent fiscal evasion. To foster intra-regional trade GIZ supported the elaboration of a Code of Conduct against Harmful Tax Competition for the East African Community. The enforced application of harmonised tax laws in the Partner States minimises harmful tax competition among firms and combats tax avoidance and tax evasion in the region.
The institutionalisation of consultation processes and improved communication between the EAC Secretariat, the national Ministries of Finance and Revenue Authorities as well as other relevant stakeholders such as private sector associations are an essential factor for a successful integration process.
We will continue to provide support to consultation and decision-making processes on harmonised tax laws and fiscal procedures on the national and regional level.
In order to address the need of capacity development by Revenue Authorities on implementation of the DTA in the region, we will, jointly with our partner, the EAC, conduct trainings on the implementation of the DTA in the region.
In addition, the cooperation with the Secretariat on the implementation and enforcement of the Code of Conduct on Harmful Tax Competition will be pursued.
Studies, documents and other relevant papers on tax harmonisation in the EAC are available from the Download Section.
Head of Component: