NAIROBI, Kenya, Oct 13 – Tourism Cabinet Secretary Phyllis Kandie says the East African Community (EAC) Tax Harmonisation is set to be complete in April 2015. 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...

Nairobi; Kenya: The Government’s failure to reach a deal on the Economic Partnership Agreement (EPA) has placed Kenya’s foreign policy in the spotlight, raising questions about the country’s ability to adequately represent its trade interests globally. This comes as resources at the Foreign Affairs office appear directed towards the criminal cases facing President Uhuru Kenyatta and his deputy William Ruto at the International Criminal Court (ICC), leaving Kenya economically exposed. The move has also exposed the country’s economy to billions of shillings in losses and hundreds of thousands of job cuts as exporters are left reeling under heavy taxation from the European Union (EU), putting Kenya’s key foreign exchange earnings on line. Trade talks Now, analysts want the Government to consider re-organising and perhaps splitting the highly complex Ministry of Foreign Affairs and International Trade. This comes as the EPA trade talks between the East African Community (EAC) and the European Union (EU) stall, having missed their ratification deadline two weeks ago. “The problem with the stalling of the EPA is that the Foreign Affairs office was really caught up in the ICC cases and failed to give enough attention to the EPA talks,” explained an economist at the Kenya Institute for Public Policy Research and Analysis (Kippra), who asked not to be named due to the sensitive nature of the topic. “By the time we realised as a country that the deadline was here and the other East African countries had abandoned us, it was too late and now...

October 1 was the deadline set by the European Union for the East African Community to conclude, initial and ratify the Economic Partnership Agreement (EPA). This never happened. We must squarely put the blame where it belongs. The decade long trade negotiations failed to meet the deadline due to inflexibility on the side of the EU to address concerns brought forth by EAC negotiators on three outstanding issues of the negotiations. These include export taxes, non-execution clause as well as the agricultural subsidies given to EU farmers. The EU has been extremely aggressive to ensure that African countries eliminate the export taxes. The first attempt was through a proposal to the WTO for an introduction of an agreement on export taxes which was out rightly rejected by the WTO members. The EU further consolidated the Raw Material Initiative (RMI) whose main pillar seeks to reinforce its trade strategy through an open campaign against restrictions such as export taxes. The export taxes remain critical for EAC member states for several reasons. They could be applied in very exceptional circumstances such as to protect infant industries, encourage value addition, for food security purposes as well as protection of environment. This is why the policy space needs to be safeguarded from any sort of a trade agreement. The EPA council should not determine the kind of export taxes to be applied by the EAC. Kenya and Ethiopia have applied export taxes in the leather industries and seen a tremendous improvements and revival of...

East African states have ceded ground in their push for uniform taxes, a shift that would see members initially retain different domestic levies in a single customs territory (SCT). Insiders said the latest round of negotiations had focused on setting specific limits within which domestic rates would have to fall to boost fair competition. “We may end up with different tax laws, but have to agree on specific margins for the single customs territory,” John Njiraini, commissioner-general of Kenya Revenue Authority, said in Nairobi on Monday as the agency launched its Taxpayer’s Week. “The ultimate aim of the single customs territory, however, is to have a common law that ensures that the region has uniform rates and administration system for internal taxes,” he added. The region has been pushing to harmonise its domestic taxes since 2005 without much progress. Kenya, Uganda and Rwanda are currently piloting a SCT, but each state has kept its domestic taxes intact. The five East African Community states initially announced plans to launch the region’s single customs territory next month, but this has since been pushed to April 2015 after individual member states failed to cede ground on domestic taxes. Among the taxes that the states want to make uniform are VAT and excise rates as well as preferential taxes extended to bilateral trade partners. Despite seven years of negotiation, Uganda, Rwanda and Burundi are still levying VAT at a rate of 18 per cent while Kenya and Tanzania charge 16 and 20 per cent...

DAR ES SALAAM, Tanzania - Twaweza, a 10 year citizen-centered initiative, focusing on large-scale change in East Africa says eight out of 10 Tanzanians (80%) think Tanzania should remain in the East African Community (EAC). In addition, nine out of ten (85%) approve (or strongly approve) of greater integration with Kenya and Uganda, whereas six out of ten citizens also support increased integration with Rwanda (62%) and Burundi (59%). The findings were released jointly by Twaweza and the Society for International Development (SID) in Dar es Salaam last week in a research brief titled “Let’s build one house! What Tanzanians think about the East African Community”. “The brief is based on data from Sauti za Wananchi, Africa’s first nationally representative high-frequency mobile phone survey that interviews households across Mainland Tanzania. Data were collected in August 2014,” reads part of the survey. Apart from voting for integration, citizens broadly believe the impact of the East African Community will be positive, the strongest vote of confidence is economic; twice as many citizens think that the EAC will have positive impact (42%) as compared to negative (20%) on the economy of the country. Similarly more citizens think the EAC will have a positive rather than negative impact on security (37% against 20%), politics (35% versus 25%) and culture (33% versus 24%). Over the past two years, headlines around integration have focused on the formation of the so-called Coalition of the Willing who joined forces and agreed to speed up integration processes. Although only...

Majority of Tanzanians say the East African Community has positively impacted the country’s economy and want it to join in fast-tracking integration, according to a new survey. Three EAC member states, Kenya Rwanda and Uganda— sometimes called the Coalition of the Willing, have agreed to speed up several integration issues, with Tanzania and Burundi remaining cautious about hastening the process. According to a survey brief launched in Dar es Salaam by an East African initiative, Twaweza, the majority of Tanzanians are positive about integration with the largest and economically most important EAC members, Kenya and Uganda. According to researcher Elvis Mushi, 80 per cent of the people reached by mobile phone were not aware of the Coalition of the Willing, but among those who have heard about it, 67 per cent wanted their country to be part of it. Mr Mushi said the majority approved the introduction of a single tourist visa for visitors coming to any EAC country; and the ability of EAC citizens to travel across member states using only their national identity cards. According to the survey, 70 per cent of Tanzanians oppose any effort to allow free land ownership. “Free movement of labour has 69 per cent support in 2014, compared with a separate research done by Research for Poverty Alleviation in 2008, in which free movement of people, goods and services had 67 per cent support,” he said. Mr Mushi said many respondents supported free movement of labour on the grounds that EAC labour market...

East African traders have expressed fears that subsidised Egyptian products will swamp the regional market following a decision by the East African Community to extend the Free Trade Area to Cairo. The traders say the extension, without any qualifications based on rules of origin, would render EAC products less competitive on the market because energy costs, in particular, are substantially lower in Egypt. Vimal Shah, the chairman of the Kenya Private Sector Alliance (Kepsa), said as long as the issue of the Rules of Origin is not addressed, there would continually be a trade dispute between the EAC and Egypt, and that the former would be the loser. “EAC manufacturers exporting to Egypt are required to observe the 35 per cent threshold of value addition to qualify for free access to the Common Market for Eastern and Southern Africa (Comesa), of which Egypt is a member; but instead, Egypt has demanded that we observe the 45 per cent threshold it introduced against the Comesa requirement,” said Mr Shah, adding that this will undermine the equality of trade between the two parties. At a recent bilateral meeting between the EAC and Egypt, the two parties agreed to allow free movement of goods under the Free Trade Area regimes based on the acquis principle — “that which has been agreed upon.” “We are extending the FTA to all the EAC partner states and we are looking for a reciprocal offer from the EAC partner states too,” said Egypt in the agreement. Egypt...

Despite a high profile launch this week by the leaders of Rwanda, Uganda and South Sudan, Uganda’s $7 billion Standard Gauge Railway project is still haunted by procurement snags. The leaders launched the project in Kampala on October 7, as Uganda scrambled to kick-start it with a tentative completion date of March 2018. As government officials put on a show, questions were still being asked not only over how the procurement of the contractor had been handled but also over the basis upon which the contract price of $7.9 billion had been arrived at. The EastAfrican has now learnt that the contracts committee of the Ministry of Works has thrown a spanner in the works, refusing to award a contract to civil contractor China Harbour and Engineering Works (CHEC), citing non-compliance with procurement regulations. In the letter dated October 7, the committee members say they were asked to approve the contract with CHEC because the deal had already been approved under bilateral procedures. The contract committee however pointed out that it had not seen any evidence to corroborate this. “This is to inform you that at its 623rd meeting, the contracts committee considered the submission forwarded under your internal memo of 7th October 2014 and noted that the contracts committee did not approve this procurement as per Section 28 of the PPDA Act. However you have given an explanation that the procurement follows bilateral procedures and conditions for which you have not availed the documents in support of the bilateral...

Container Freight Stations (CFSs) will be required to install weighbridges at their facilities in a move intended to check overloading of trucks. This is one of the measures stakeholders in the transport sector have proposed, and which they are expected to commit themselves to in a charter signing ceremony today in Mariakani. Kenya Ports Authority and Kenya National Highways Authority will seek other ways to ensure cargo loaded on trucks is of required weights. Transport and Infrastructure Cabinet Secretary Michael Kamau is among dignitaries from sectors in the cargo clearance and transport through the Northern Corridor who will witness the signing ceremony. Overloading of trucks leaving Mombasa port and CFSs has been a bone of contention with various agencies blaming each other for non-compliance to required weight limits. ABETTING OVERLOADING Kenya Revenue Authority officials, managers of weighbridges and the police have been accused of abetting overloading by accepting bribes. “Since various measures put in place to curb overloading, including punitive fines have failed, we have decided to go the self-regulation way. This is an initiative we believe will work because each member of an organisation will have a responsibility to ensure trucks are not overloaded,” Kenya Transporters Association (KTA) chairman Paul Maiyo said on Sunday. Agencies that will sign the pact include Shippers Council of Eastern Africa, Kenya International Freight and Warehousing Association, Long Distance Truck Drivers’ Union and CFS Association of Kenya. Other public sector organisations are Ministry of Transport and Infrastructure, National Transport Safety Authority, Kenya Maritime Authority...

TradeMark Africa (TMA) an international organisation with its headquarters in Kenya has announced the appointment of its new Board members. Renowned Tanzania Businessman, Ali Mufuruki of Tanzania joins as Board Chair, Ms Merian Sebunya from Uganda and Mr Patrick Obath from Kenya join as board members. Making the announcement TradeMark Africa (TMA) CEO Frank Matsaert said; ‘We are pleased to have these distinguished professionals join our board. They know our work well as they previously served on our Programme Investment Committee (PIC). We warmly congratulate our highly qualified board members on their appointments and look forward to working with them closely.’ Mr. Mufuruki is Chairman and CEO of Infotech Investment Group LTD of Dar es Salaam, and founding partner of East Africa Capital Partners (EACP) and Chairman of Wananchi Group Holdings LTD based in Nairobi Kenya. Mufuruki is the founding Chairman of the CEOs’ Roundtable of Tanzania, as well as Chair of the Africa Leadership Initiative (ALI) East Africa Foundation among other positions. He is a holder of a BSc degree in Mechanical Engineering Design (Reutlingen, Germany 1986) and a Henry Crown Fellow of The Aspen Institute Class of 2001. Ms. Merian Sebunya is a distinguished consultant in the freight transport sector. She is the president of the Federation of East African Freight Forwarders Association (FEAFFA) and Chairperson of the Uganda Freight Forwarders Association and Associated Freight Logistics Centre. Merian is also the Managing Director of BTS Clearing and Forwarding Company based in Uganda, and is a member of various...