Investors in extractive sector don’t need incentives- tax expert

Four East African countries losing US$1.5-2billion

A 2016 report by Tax Justice Network Africa and Action Aid International revealed that collectively, four East African countries – Kenya, Uganda, Tanzania and Rwanda – could still be losing around US$1.5 billion- 2 billion a year to tax incentives.

The civil society organisations argues that whereas policy intentions for granting tax incentives may be well-intentioned, often, their effectiveness is questionable.

They say tax incentives can be redundant – fail to yield the anticipated benefits, fuel the race to the bottom, facilitate illicit financial flows, promote corruption and distort market forces.

“As a result, governments’ collective domestic resource mobilisation (DRM) capabilities can be easily harmed,” they said.

Meanwhile, Kenneth Bagamuhunda, Director General at the East African Community Secretariat revealed that the EAC Domestic Tax harmonisation policy has been completed and now awaits implementation.

The policy is aimed at ensuring that national tax rules are consistent with EAC’s overarching goal of improving the welfare of the regional citizens and that they do not give businesses from one country unfair advantage over their main competitors in another country.

According to the policy of harmonisation of domestic taxes in the EAC is expected to take a progressive approach starting from excise and VAT followed by income tax at a later stage, once significant progress has been made in the harmonization of VAT and Excise duties.

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