Inefficiency, corruption and unharmonised tax regimes could slow down regional efforts to attain impressive economic growth in the region, business leaders have warned.

They say the region must move faster to have the double taxation treaty ratified by all the East African Community (EAC) partner states, lest it affect the capacity to invest and thrive on the  global stage.

Speaking on the final day of the East Africa Business summit in Kigali, yesterday, business leaders said dealing with these challenges will help boost intra-regional trade.

Tax regimes should not become a barrier to common market protocol initiatives, including free movement of labour, skills and services, David Tarimo, PWC senior country partner, Tanzania said.

 "We must work hard to eliminate all trade barriers so as to make the region more competitive, create jobs and increase government revenue,” he said.

Reducing the risk of double taxation will help fast-track growth of businesses and investments in the region, thus spark sustainable economic growth, Tarimo noted.

Tarimo explained that harmonisation does not mean that tax rates have to be equal, but it simply aims at preventing any national tax measures that could have a negative effect on the functioning of the Common Market and that could distort competition.

Traders had hoped that the agreement could be ratified by the end of last year with anticipation of lowering taxes and increasing cross-border investments.

However, most member states  moved rather slowly on the issue, hence affecting doing business in the region.

The EAC Council of Ministers approved the Community’s double taxation treaty in 2010, but only Rwanda has ratified the agreement while the other four partner  states; Burundi, Kenya, Uganda and Tanzania are yet to adopt it.

The framework needs to be ratified by all countries to become operational, something that business leaders want to see done as soon as possible.

"We need this treaty ratified because you can’t talk about a single customs union without dealing with this issue of double taxation,” Felix Mosha, the Chairperson East African Business Council, told The New Times on the sidelines of the meeting. 

"Governments must work toward winning investors if the region must achieve inclusive growth.  This may include overcoming our fears and have the treaty ratified,” Mary Mukindia, management consultant in oil and gas sector based in Nairobi, noted.

The two-day summit brought together more than 100 captains of industry and policy makers.

Private sector tasked 

Emmanuel Hetegeka, the Permanent Secretary in the Ministry of Trade and Industry, said strategic regional and global partnerships should be a priority to encourage more innovation and creativity.

He, however, said quality infrastructure, streamlined procedures and competent institutions is what is needed to achieve economic development.

Richard Tusabe, the Commissioner General Rwanda Revenue Authority, said there is also need to increase economic activity for Small and Medium Enterprises so that governments can be able to fund their national budgets and widen their tax base,

The East African Business summit was organised under the theme; "Regional economic development for inclusive growth” as a joint initiative of Citibank, Deloitte, KPMG, Nation Media Group, PwC and The Serena Hotels.