TAX AGREEMENT

EAC revenue bosses commit to integration, sealing revenue leaks

The Commissioner Generals yesterday held the 48th Biannual Assembly of East African Revenue Authority Commissioners Generals meeting.

In Summary

•The meeting provided the Commissioners Generals with a platform to share their experiences and address challenges facing tax administrations in the region.

•In the quarter of July to September 2020, the revenue growth in the region ranged from -44.9 per cent to 2.1 per cent.

KRA Commissioner General James Mburu
KRA Commissioner General James Mburu
Image: Courtesy

Revenue Authorities from the region have renewed commitment to the East African Community (EAC) integration and curbing of revenue leaks.

This is on the back of the Covid-19 pandemic that has hit revenue collection, with all revenue authorities reporting declining performance during the period March to September 2020, with the greatest decline registered in May 2020.

In the quarter of July to September 2020, the revenue growth in the region ranged from -44.9 per cent to 2.1 per cent.

 
 

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

Yesterday, the revenue bosses agreed on the continued 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 regional revenue bosses are also keen to the use of technology and data analytics to enhance revenue collection, compliance and identification of potential revenue as well as enhancing support to taxpayers.

Development of a joint strategy for the East African Revenue Authorities to address taxation of the digital economy is also in progress.

This is targeted at the legal framework in terms of definitions, identification of players and the legal mechanisms, a move that will see them go after the digital market place.

Kenya is already ahead with the gazettement of the Digital Marketplace Supply Regulations, 2020, by National Treasury Cabinet Secretary Ukur Yatani in October.

It gives the Kenya Revenue Authority (KRA) the go-ahead to roll out systems that will enable it to net the much-needed revenues from the digital market place.

The Commissioner Generals who yesterday held the 48th Biannual Assembly of East African Revenue Authority Commissioners Generals (EARACGs) meeting, chaired by KRA Commissioner-General James Mburu, agreed to leverage on technology and building of technical skills.

 

“We have also agreed to continue engaging with the EAC Secretariat on the need to establish a Committee on Tax Affairs at the EAC where tax administration matters  and other administrative issues not related to customs can be deliberated,” Mburu told journalists after the meeting.

The authorities have also committed to fast track the integration of domestic taxes systems in the region.

“A team consisting of Commissioners of Domestic Taxes and Directors of ICT is to hasten the work on this. The team is directed to work closely and leverage on the expertise and work done by ATAF (African Tax Administration Forum) on the same,”said Mburu.

Commissioners General directed that in order to improve the integrity of staff in the Revenue Authorities, lifestyle audits should be conducted across the region.

Only Kenya has made progress on this with Rwanda yesterday saying it is benchmarking on Kenya.

Meanwhile, the East African Community Secretariat is further expected to come up with an agreed framework on how to address base erosion and profit shifting and illicit financial flows within the region.

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

The renewed commitment comes even as protectionism remains a major impediment to regional integration, which has remained slow over years.

Regulations which vary per partner state have been blamed for prohibiting smooth regional trade, to allow for free flow of goods and services within the region.

The private sector has also on several occasions been blamed for contributing to Non-Tariff-Barriers, by pushing their respective home governments to push for national interests as opposed to the regional integration agenda for the sake of preserving their markets.

Yesterday's forum was attended by Commissioner General's from Kenya, Uganda, Tanzania, Rwanda, Burundi and South Sudan.