East Africa Needs Tax Harmony

November 14, 2011 International Tax Cooperation

Jakaya M. KikweteDAR ES SALAAM – The countries of East Africa need to cooperate and make concurrent tax reforms in order to enjoy the benefits of close economic intergration.

During a speech given on November 11th in front of the regional public-private dialogue on Harmonization of Domestic Taxes for the East African Community (EAC), the President of Tanzania Jakaya Kikwete called for a harmonization of tax systems across the region.

In his speech the President said that increasing tax cooperation and tax systems harmonization between Burundi, Kenya, Rwanda, Tanzania and Uganda will dramatically increase economic efficiency of the countries of East Africa. Reforming the tax systems to closer match the tax and custom regulation of the neighboring countries would serve to reduce the level of economic distortion in the region, and would maximize the effectiveness of efforts to integrate the country’s economies.

During his speech the President conceded that there is still public hesitation towards the idea of integrating tax systems, and the work should be carried out immediately to address these concerns. He added that the success in harmonizing customs duties in East Africa should serve as a good indicator of the potential benefits of tax changes.

Commenting on the potential benefits of harmonizing taxes across East Africa, Secretary General of EAC Richard Sezibera said that the move would further boost foreign investments into the region, and would serve to greatly reduce tax evasion in each country.

Photo by World Economic Forum