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doi.org/10.36475/L.A.W.14
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    რეზიუმე - Journal Law and World

    Volume 9, Issue 1

    Towards a harmonised eac tax sysyem: curent status, challenges and way forward*

    Authors: Pie Habimana

    Pie Habimana

    Doctor of Law, Lecturer, School of Law, University of Rwanda; Partner, Amilex Chambers

    Email: pihabimana@gmail.com



    Affiliation: Doctor of Law, Lecturer, School of Law, University of Rwanda; Partner, Amilex Chambers

    Abstract: Under Article 79 of the EAC Treaty, the Partner States have under- taken to harmonize and rationalize investment incentives to promote the Community as a single investment area while avoiding double taxation. Article 83 of the same Treaty states that the Partner States have committed themselves to adjust their tax policies to eliminate tax distortions. These provisions show the extent to which the EAC Partner States are willing to advance with tax integration as part of comprehensive regional integration. This approach is welcomed, as scholars generally agree that full regional integration cannot be achieved with- out tax integration. In this sense, tax harmonization is seen as a sure path to tax integration, a driver for effective regional integration. It is unfortunate, however, that tax harmonization in the EAC faces several challenges. Some causes of the challenges are legal, such as differences in legal systems, while others are geopolitically motivated. This paper discusses where the EAC currently stands in relation to tax harmonization. Starting with a theoretical framework, the paper focuses on the current practical aspects of tax harmonization in the EAC. The paper, therefore, highlights the existing discrepancies alongside the challenges in building a harmonized tax system in the EAC. The pa- per identifies three ways out de jure harmonization through traditional law-making by the legislature, de facto harmonization through judicial law-making processes, and tax coordination where tax harmonization does not work.

    Keywords: EAC, Tax harmonisation, Tax coordination, Regional integratio


    Language: EN

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    სქოლიო:

    1. Clayton, V. H., (2019). African Regional Economic Integration in the Era of Globalisation: Reflecting on the Trials, Tribulations, and Triumph. International Journal of African Renaissance Studies, 14(1), p. 3, doi: 10.1080/18186874.2019.1577145.
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    3. Masinde, W., Omolo, C. O., The Road to East African Integration in Ugirashebuja, Ruhingisa, J. E., Ottervanger, T., Cuyvers, A., (2017). East African Community Law: Institutional, Substantive and Comparative EU Aspects, Brill Nijhoff, p. 15.
    4. Ibid., p. 16.
    5. East African Community, Secretariat, Communique on the signing of the Treaty of accession of the Democratic Republic of Congo to the Treaty for the Establishment of the East African Community, Kenya, 8th April 2022.
    6. EAC, Quick Facts about EAC. Link [Last seen 10.12.2022].
    7. Treaty for the establishment of the East African Community (As amended on 14/12/2006 and 20/08/2007), art. 5(1).
    8. Mei, A. P., (2009). Regional Integration: The Contribution of the Court of Justice of the East African Community. ZaoRV, 69, p. 404.
    9. Fairhurst, J., (2018). Law of the European Union. Pearson Longman, 11th ed., p. 52.
    10. Gastorn, K., Wanyama, M., (2017). The Legal Analysis of the Common Market of the East African Community as Market Freedoms in the Open Market Economy in Ugirashebuja, E., Ruhingisa, J. E., Ottervanger, T., Cuyvers, A. (2017). East African Community Law: Institutional, Substantive and Comparative EU Aspects, Brill Nijhoff, p. 285.
    11. Caroline, K., Wanyama, M., Free Movement of Workers in the EAC, in Ugirashebuja, E., Ruhingisa, J. E., Ottervanger, T., Cuyvers, A., (2017). East African Community Law: Institutional, Substantive and Comparative EU Aspects, Brill Nijhoff, p. 351.
    12. Fair, D. E., Boissieu, C. D., (2012). Fiscal policy, Taxation and the Financial System in an Increasingly Integrated Europe, Springer Science & Business Media, 22, pp. 374-375.
    13. EAC treaty, art. 80(f), 82(b), 83(e); Protocol on the establishment of the East African Community Common Market, art. 32.
    14. Petersen, H. G., (2010). Tax Systems and Tax Harmonization in the East African Community (EAC), Report to the GTZ and EAC on Tax Harmonization and Regional Integration, p. 3.
    15. Oloruntoba, S. O., (2015). Regionalism and integration in Africa: EU-ACP economic partnership agreements and Euro-Nigeria relations. Palgrave Macmillan, p. 35.
    16. Ibid.
    17. Keuschnigg, C., Loretz, S., Winner, H., (2014). Tax Competition and Tax Coordination in the European Union. Working Papers in Economics and Finance No. 2014-04, p. 2. EAC Treaty, art. 75(4), 75(6).
    18. EAC Treaty, art. 80(1) (f).
    19. EAC Treaty, art. 85(1)(c).
    20. EAC Treaty, art. 82(1)(c).
    21. EAC Treaty, art. 83 (2)(c).
    22. EAC Treaty, art. 83 (2)(e).
    23. ENSAfrica Rwanda Ltd v RRA, RCOMA 00350/2019/HCC, Commercial High Court, 04/12/2019, par. 11(a); Urugaga rw’Abavoka mu Rwanda v. Leta y’u Rwanda, RS/INTL/ SPEC 00001/2020/SC, Supreme Court, 23/10/2020, para. 15; ENSAfrica Rwanda Ltd v RRA, RCOM 01512/2020/TC, Commercial Court, 08/12/2020, para. 5.
    24. RRA v. ENSAfrica, RCOMA 00017/2021/HCC, Commercial High Court, 29/12/2021, para. 26.
    25. Ibid., para. 27.
    26. ENSAfrica Rwanda Ltd v RRA, RCOM 01492/2019/TC, Commercial Court, 20/03/2019, pars. 13 and 14.
    27. ENSAfrica Rwanda Ltd v RRA, RCOMA 00350/2019/HCC, Commercial High Court, 04/12/2019, para. 10 and 11.
    28. ENSAfrica Rwanda Ltd v. RRA, RCOM 01512/2020/TC, Commercial Court, 08/12/2020, para. 18 and 19.
    29. Cachia, F., (2017). Analyzing the European Commission’s Final Decisions on Apple, Starbucks, Amazon and Fiat Finance & Trade. EC Tax Review, 1, p. 34; Sentsova, M., et al., (2018). Tax Sovereignty and the Concept of Fiscal Rule-making in the Countries of Central and Eastern Europe. VSU Publishing House, p. 78.
    30. Nzafashwanayo Dieudonné v. Government of Rwanda, RS/INTL/SPEC 00001/2020/SC, Supreme Court, 2/8/2020, para. 35.
    31. The Constitution of the Republic of Rwanda of 2003 revised in 2015 (O.G. No. Special of 24/12/2015), art. 95.
    32. KMG, Tax Data Card East Africa 2020/21. Link [Last seen 19/10/2022]; Law No. 016/2018 of 13/04/2018 establishing taxes on income (O.G. No. 16 of 16/04/2018), art. 60(2).
    33. Ibid.
    34. Kenyan VAT Act 2013, section 5(2); Law (Rwanda) No.37/2012 of 09/11/2012 establishing the value added tax (O.G. No. Special of 05/02/2013), art 3(3); Tanzania VAT Act 1997, section 5; Loi (Burundi) No. 1/12 du 29 Juillet 2013 portant révision de la loi No. 1/02 du 17 Février 2009 portant institution de la taxe sur la valeur ajoutée, art. 15.
    35. Ugandan VAT Act, section 7(2).
    36. Kenyan VAT Act, section 32(1)(b); Tanzania VAT Act, section 28(4).
    37. Ordonnances Ministérielle No. 540/708/2009 du 2/06/2009 portant mesures d’application de la loi No. 1/02 du 17 Février 2009 portant institution de la taxe sur la valeur ajoutée, art. 2.
    38. Kenya has tax treaties with the UK, Germany, Norway, Sweden, Denmark, India, Canada, Zambia, France, Iran, Qatar, Seychelles, SA, UAE, and South Korea.
    39. Rwanda has tax treaties with Belgium, China, DRC, Jersey, Luxembourg, Mauritius, Morocco, Qatar, Singapore, SA, Turkey, UAE.
    40. Tanzania has tax treaties with Canada, Denmark, Finland, India, Italy, Norway, SA, Sweden, Zambia, while Uganda has tax treaties with Denmark, India, Italy, Mauritius, Netherlands, Norway, SA, UK, Zambia.
    41. Loi No. 1/02 du 30 juin 2020 portant ratification par la République du Burundi à l’accord pour l’élimination de la double imposition et prévention de l’évasion fiscale en matière d’impôt sur le Revenu entre les gouvernements de la République du Burundi, du Kenya, de l’Ouganda, du Rwanda et de la République Unie de Tanzanie.
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    43. Law (Rwanda) No. 30/2018 of 02/06/2018 determining the jurisdiction of courts (O.G. No. Special of 02/06/2018, art. 81.
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    48. Masinde, W., Omolo, C. O., (2017), p. 20.
    49. Ibid.
    50. Petersen, H. G., (2010), p. 87.
    51. Otieno-Odek, J., Regional Integration and Fundamentals
    52. Legal Harmonization, in Döveling, J. et al. (2018). Harmonization of Laws in the East African Community: The State of Affairs with Comparative Insights from the European Union and other Regional Economic Communities, LawAfrica, p. 30.
    53. Masinde, W., Omolo, C. O., (2017), p. 20.
    54. Otieno-Odek, J., (2018), p. 32.
    55. Posen, J., Walbeek, C., (2014). The Impact of Cigarette Excise Tax Increases and Harmonization in the East African Community, SALDRU, p. 49.
    56. Ginsburg, T., (2004). Bounded Discretion in International Judicial Lawmaking. Virginia Journal of International Law, 45(3), p. 632.
    57. Ibid., p. 635.
    58. Sachs, S. E., (2019). Finding Law. California Law Review, 107(527), p. 560.
    59. Ibid.
    60. HC Miscellaneous Cause No. 14 of 2014 cited in OtienoOdek, J., Judicial Enforcement and Implementation of EAC Law, in Ugirashebuja, E., Ruhingisa, J. E., Ottervanger, T., Cuyvers, A. (2017). East African Community Law: Institutional, Substantive and Comparative EU Aspects, Brill Nijhoff, p. 475.
    61. Sentsova, M., et al (2018), p. 78.
    62. Keuschnigg, C., Loretz, S., Winner, H., (2014), p. 2.
    63. Quak, E. J., (2018). Tax Coordination and Tax Harmonization within the Regional Economic Communities in Africa, Institute of Development Studies, p. 3. Link [Last seen 04/10/2022].
    64. Sentsova, M., et al. (2018), p. 213.
    65. Keuschnigg, C., Loretz, S., Winner, H., (2014), p. 2.
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