PUBLISHED ON September 15th, 2014

Joint tax deal to rein in EAC sugar cartels as pact takes effect

Kenya, Uganda and Tanzania will from next week jointly collect custom taxes on sugar, dealing a blow to cartels involved in dumping of the commodity in the regional markets.

The Kenya Revenue Authority said the three countries would trade in sugar under the Single Customs Territory (SCT) arrangement — which allows for joint collection of customs taxes by the EAC partners — starting September 15.

“Duty shall be paid to the destination country before release of goods from the originating country,” Beatrice Memo, commissioner for customs services said Tuesday.

Under the SCT deal that began on April 1, clearing agents with East African Community have been granted rights to relocate and carry out their duties in any of the partner states as part of a strategy to improve flow of goods and curb dumping.

Importers of commodities covered under the SCT are required to lodge the import declaration forms in their home country and pay relevant taxes first to facilitate the export process.

The tax authorities in the respective countries would then issue a road manifest against the import documents submitted electronically by the revenue authority of the importing country.

Massive shortage

Sugar industry regulators and tax agencies in EAC have been involved in frequent stand-offs over dumping of duty-free sugar within the region.

The feud has mainly drawn Kenya against Rwanda and Uganda with the former accusing the two countries of abetting the malpractice that renders its own millers uncompetitive.

At a meeting in Kampala in July Rwanda was reprimanded and urged to step up surveillance on duty-free sugar imported into its market to avoid dumping in other EAC countries.

Like Uganda, Rwanda was in 2011 allowed to make duty-free imports to cover for a massive shortage of the commodity in its domestic market due to drought. Critics claim part of duty-free sugar imports into Rwanda later found its way into other EAC markets, hurting local millers.

The partner states agreed to include sugar among the goods cleared under the Single Customs Territory arrangement by November 1.

“The advantage of the SCT platform is that it will make trade in sugar even more efficient and fast and we want it added to the list of products covered under the arrangement,” head of Sugar Directorate Rosemary Mkok told the Business Daily following the Kampala meeting.

Source URL: Business Daily

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