EAC revenue bodies to link tax systems

Clearing and paying for import taxes will soon be easy after the Rwandan, Ugandan and Kenyan revenue bodies agreed to a deal that will link their tax systems
Fuel and cargo trucks line up to clear with customs at the border. Such queues will be history after the new tax deal comes into force. The New Times / File
Fuel and cargo trucks line up to clear with customs at the border. Such queues will be history after the new tax deal comes into force. The New Times / File

Clearing and paying for import taxes will soon be easy after the Rwandan, Ugandan and Kenyan revenue bodies agreed to a deal that will link their tax systems

This is part of the implementation of the single customs territory by Rwanda, Uganda and Kenya, where cargo will be verified at Mombasa port to boost tax collections.

“The single customs territory for EAC ensures taxes are collected from first point of entry. Therefore, it will allow Uganda and Rwanda to position customs officers at the Mombasa Port,” Drocelle Mukashyaka, the Rwanda Revenue Authority deputy commissioner for taxpayer services department, said.

She added that the deal will make the Northern Corridor (Mombasa-Malaba-Kampala-Kigali) one region for custom purposes. She noted that under the arrangement, customs officials from Rwanda and Uganda will assess taxes at Mombasa, but importers will pay the taxes from their respective countries.

“The business community will also be able to use one insurance bond for East Africa to cover all transactions.With the single customs territory, time and the cost of cargo clearance will be reduced, in addition to removal of non-tariff barriers (NTBs), like roadblocks and weighbridges, along the corridor, which is good for business. Traders will be able to save the money they have been spending on NTBs,” Mukashyaka explained in an interview on Friday.

However, Mukashyaka noted that physical verification will only be on suspicious goods, but in the destination country.

Mohamed Mazimpaka, the chamber of commerce boss, welcomed the development, saying it will increase efficiency and reduce the cost of doing business. “We need a ‘smooth’ tax policy and procedures that support business growth,” Mazimpaka said.

Mark Priestley, the TradeMark East Africa country director, said the move would promote regional trade. “Traders have been spending a lot of money and time dealing with NTBs... the policy will improve business efficiency.”

Over a month ago, the three Heads of State of Rwanda, Uganda and Kenya agreed on the need to collect customs duties by Uganda and Rwanda before goods are released from Mombasa port.

Last week, Kenya’s Cabinet Secretary for Transport and Infrastructure, Michael Kamau, announced the removal of all roadblocks between Mombasa and Uganda’s Malaba border to ease movement of goods on the Northern Corridor.

According to a study by the World Bank, Doing Business in East African Community 2013, increasing customs efficiency can boost trade volumes. In sub-Saharan Africa an inefficient trade environment was found to be among the main factors in poor trade performance. The study found that a one-day reduction in inland travel times leads to a 7 per cent increase in exports.

It indicates that improvements in transport efficiency and the business environment have a greater marginal effect on exports in lower income economies than in high-income ones.

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