Inside Politics

EAC agree to tax tech economy

Friday, November 13th, 2020 00:00 |
EAC-Flags. Photo/Courtesy

Xinhua and Abraham Apollo 

In order to boost revenue collection, tax authorities of the East Africa Community (EAC) member-States have agreed to develop a joint strategy for taxation of the fast growing digital economy.

The heads from Kenya, Uganda, Tanzania, Rwanda, South Sudan and Burundi said that a digital tax could help boost dwindling revenues in a bid to fund delivery of public services.

“We have agreed to develop a joint strategy for the East African Revenue Authorities to address the taxation of the digital economy by addressing issues to do with the legal framework in terms of definitions, identification of players and the legal mechanisms,” they said the communique that was released during the 48th East African revenue authorities commissioners general meeting held virtually.

Virtual meeting

During the biannual meeting, the tax officials of the six countries also agreed to fast track the integration of domestic tax systems in the region.

The tax authorities also decided to come up with an agreed framework on how to address base erosion and profit shifting and illicit financial flows within the EAC.

“This will be addressed through legislation covering the various business models and administrative measures.”

The tax officials from the region said all revenue authorities reported declining revenue performance during the period of March to September due to the Covid-19 pandemic with the greatest decline being registered in May. 

Double digits

“In the quarter of July to September, the revenue growth in the region ranged from -44.9 percent to 2.1 per cent.

This was unprecedented bearing in mind that the revenues have on average been growing at double digits,” they said.

The revenue bosses also agreed on the need for use of the Alternative Dispute Resolution mechanism to unlock revenue, with KRA currently having over 1,000 cases and Sh300 billion in disputed tax pending hearings.

The authorities which meet twice a year was hosted this year by the Kenya Revenue Authority Commissioner-General  James Mburu.

More on Inside Politics