Electronic tax

Tax disputes, trade wars headache for new EABC board

By LUKE ANAMI

The East African Business Council (EABC), which last week elected a new executive committee, said it would fast-track the formation of a trade remedy committee to settle disputes and reduce disruptions in the common market for East African Community (EAC).

The team, elected on the sidelines of the Commonwealth Heads of Government meeting in Kigali, comes at a crucial time when EAC partners are bickering over trade rules, and Rwanda and the Democratic Republic of Congo have all but shut down their borders to trade for security reasons. in the face of violence attributed to the resurgence of the rebel group M23.

Executive Committee

The new private sector lobby team, led by Tanzanian Angelina Ngalula, is expected to decisively tackle tariff and non-tariff barriers (NTBs) that impede regional trade.

The executive committee was due to meet Ugandan President Yoweri Museveni on June 30, amid threats from Kampala to withdraw the duty rebate in retaliation for a trade war with Kenya involving agricultural products, and blamed on Nairobi’s persistent introduction of tax measures on Ugandan exports.

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“We face so many challenges in accessing markets for Ugandan produce in Kenya.

“In fact, Uganda is trying to get out of the duty remission system, but we are working to keep them there,” said Simon Kaheru, president of the Ugandan chapter of EABC, who was retained as vice president. advice.

“Uganda has a surplus of industrial sugar but there is nowhere to sell it. The same goes for milk and other basic products,” he added.

If Ugandan manufacturers opted out of the duty remission scheme, it would have a huge impact on intra-EAC trade, as no country would have a mandate to collect import revenue.

“Some of our products, despite high value and low prices, do not have access to the regional market. Some of our neighbors are contravening our customs union and common market principles,” complained Tony Gadhoke, CEO of Mukwano Industries, when EABC Managing Director John Bosco Kalisa visited the company in Kampala on June 29.

“We call for the elimination of the suspension of NTB applications, the revision of the EAC rules of origin on edible oil and the electronic publication of a region-wide duty remission program “said Mr. Gadhoke.

Break the rules

Mr. Kalisa, who also met with Ugandan manufacturers, expressed concern about the way trade disputes between Kenya and Uganda were being handled.

“We are currently in Uganda and there are complaints that the Kenyan authorities are still imposing tax measures on Ugandan imports without any major consultation,” he said.

Kenya has imposed a new tax on poultry, eggs, milk, sugar and other Ugandan products in violation of EAC regulations.

“Ugandan fresh produce should access the Kenyan market without any constraints.

“But they impose tax measures without consulting them, and it’s not good for bilateral trade or even for internal trade,” Kalisa said.

Lily: Private sector calls for tax uniformity in the EAC

The involvement of President Uhuru Kenyatta’s family in Kenya’s dairy sector is seen as one of the main factors behind the three-year trade dispute.

But no evidence has been offered of the president’s interference in the trade.

eggs

Businessmen display eggs for sale. Trade wars continue to rock the EAC bloc. FILE PHOTO | NMG

Kenya now taxes Ugandan eggs at a rate of Ksh 72 ($0.6) per tray, bringing back a levy that was suspended last December following bilateral talks.

The decision has angered Ugandan traders and Kenyan consumers as the price of eggs in Kenya has risen, thanks to the imposed 25% excise duty.

A tray of eggs in Kenya now costs 450 Ksh ($3.82) from 360 Ksh ($3.05) two weeks ago, with traders citing a shortage.

In retaliation for Kenya’s new tax measures, Uganda has also refused to admit Kenyan juice to its market.

Since November 2017, Kenya has complained that Del Monte pineapple juice, for example, is still subject to a 13% excise duty in Uganda.

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Pineapple juice line

Uganda argued that it was difficult to differentiate between pineapple juice made from local concentrate and juice made from concentrate imported under duty remission for exports.

Under the EAC, duties are waived if the basic ingredients are produced locally.

Uganda argued that it could not give preferential treatment to Del Monte pineapple juice and requested an amendment to this NTB since Kenya also levies excise duty on Ugandan juices.

On June 14, the EAC Secretariat reported that Uganda would like the matter to be forwarded to the Trade and Finance Sector Council for resolution.

Uganda also imposed excise duties on Kenyan manufactured goods, including pharmaceuticals.

As the trade war between Kenya and Uganda threatens to escalate, another simmers between Rwanda and Tanzania.

Read also : Tanzania reaps spoils from Uganda’s trade fights

Since 2018, Rwanda has complained that milk exported to Tanzania is subject to numerous charges levied by different institutions such as the Tanzania Bureau of Standards, the Tanzania Foods and Drugs Authority and the Tanzania Dairy Board.

To import a kilogram of milk into Tanzania, the government now requires Tsh 2,000 ($0.86) compared to Tsh 150 ($0.064).

This is an increase of 1,233%, under the Animal Diseases and Movement of Animal Products Control Regulations issued on August 31, 2018 (Government Notice No. October 1, 2018.

Rwanda says this amounts to a total ban since imported milk cannot compete with local milk.

The dispute is not yet resolved.

All eyes will be on the EABC, especially since a key player in these disputes sits on the executive committee.

Trade war in Tanzania

A trade dispute is also bubbling between Uganda and Tanzania. Uganda does not recognize the calibration certificate issued by the Weights and Measures Officer (WMA) for oil tanks in Tanzania. As a result, Tanzanian traders are forced to undergo recalibration by the Uganda Bureau of Standards at a cost of $230. This increases the cost of doing business.

There are also disputes between Tanzania and the rest of the EAC partner states over work permits.

Dodoma requires a business visa fee of $250 for EAC businessmen entering Tanzania, charged as a certificate of temporary posting at all borders, contrary to the EAC common market protocol on the free movement of people in the region.

Fees are charged to persons visiting Tanzania for temporary assignments (economic activities and professional services) such as consultancy.

Tanzania has been requested to waive fees for East African citizens in accordance with Regulation 5 of the EAC Common Market Protocol.