EA Business Council again urges on double taxation
What you need to know:
A double taxation treaty means that an income which has already attracted any form of taxation in the signatory country cannot be subjected to another levy by any of the countries involved.
Businesses across East Africa have kicked off a fresh bid to implement a law on double taxation that will lower a worsening tax burden and boost cross-border movement of capital.
The East African Business Council wants the five East African countries — Kenya, Uganda, Tanzania, Rwanda and Burundi — to ratify the protocol in the next one year.
So far, only Rwanda has ratified the EAC agreement on Double Taxation Avoidance (DTA) signed in September 2010, which was to be implemented within a year. The law will also be used as a benchmark to negotiate DTA treaties with non-member-countries.
“The DTA agreement is long overdue and is a big trade issue that ought to be addressed,” said Vimal Shah, the chairman of the EABC board of directors.
Business executives have cited double taxation as the biggest stumbling block threatening trade and the full implementation of the EAC Common Market Protocol.
Sources in the EAC Secretariat said Uganda, Kenya, Tanzania and Burundi are cautious about implementing the strict tax code as it would make them unattractive for foreign direct investments.
However, while the EAC countries are cautious about implementing the DTA, most have similar arrangements with other countries outside the bloc.
Rwanda has double taxation avoidance treaties with South Africa and Mauritius; Uganda with 10 countries; Tanzania has it with nine countries and Kenya with eight countries. Burundi does not have any tax treaty with any country.
A double taxation treaty means that an income which has already attracted any form of taxation in the signatory country cannot be subjected to another levy by any of the countries involved.
In 2011, EAC finance ministers agreed on a legal framework for implementing the DTAs. Uganda and Kenya said they would complete the remaining legal steps to put into practice double tax agreements with EAC partners.
