East African Business Week

ARUSHA, TANZANIA - The East African Community (EAC) secretariat has engaged M.A Consulting Group to carry out a study on the establishment of a Single Customs Territory aimed at reducing tax evasion in the region.
The territory is also aimed at enabling the five partner states to enjoy the  economies of scale with a view to supporting the process of economic development whose roadmap was adopted by the EAC Council of Ministers in 2009.
EAC Director Customs Kenneth Bagamuhunda, who launched the study, said  its main objective is to develop options and modalities for the attainment of a single customs territory in a fully fledged customs union. "The specific objectives of the study is to identify gaps in the implementation of a fully fledged customs union taking into account the roadmap towards attaining a single customs territory," he said at a ceremony in Arusha.
He said  the Summit of the Heads of State of EAC at their meeting in December, 2010 directed the council to expedite the implementation of the roadmap for a fully-fledged single customs territory.
"At the ninth extra-ordinary summit held on April 19, 2011, the Summit received a report of the council of ministers on the proposed attainment of the single customs territory and directed the council to undertake further studies and report on 13th summit to be held in November this year," Bagamuhunda said.
A United Nations Conference on Trade and Development (UNCTAD) report says Africa is estimated to lose billions of dollars in domestic revenues annually through capital flight, tax evasion, the repatriation of profits by transnational corporations and high debt repayments.
This was confirmed by media reports from Uganda Revenue Authority (URA) where the Commissioner for Investigations Patrick Mukiibi is reported to have said that through economic and tax fraud, Uganda loses enough money to pay for its entire budget deficit which is about Ush2trillion.
"If we were able to collect all the money we are supposed to get, we would be able to fund our entire budget without any external support," he told the media in Kampala recently.
Kenya Charity group Christian Aid says in a report that the country loses up to Sh130 billion annually in untapped tax from corporate entities, even though it concedes that Kenya is among the most aggressive in Africa in collecting taxes
"As more foreign companies set shop in Kenya, the losses are likely to increase, explaining why Kenya and Uganda included in their 2011/12 budgets the plan to exchange information on taxes with other foreign countries," says the report.
Rwanda Revenue Authority [RRA] also reported a loss of over Rwf1 billion due to tax evasion last year while Tanzania Revenue Authority (TRA) launched a campaign to reward volunteers who provide true, accurate and specific information which may result in collection of undeclared taxes.
According to the TRA website, informants are rewarded 3% of the tax identified and collected but subject to a ceiling of shillings 20 million per transaction and where the information provided will lead to criminal prosecution in a court of law payment of the reward will be paid subject to the finalization of the court case.
Mr. Bagamuhunda said that the study proposals will be guided by analysis of the models of a single customs territories with specific focus on free circulation of goods within the customs union, revenue collection and management systems.
Others are reduction of internal customs border controls and treatment of domestic taxes on goods traded across Partner states, application of rules of origin in a single customs territory, legal, institutional and administrative arrangements among others.