Reports Leo Odera Omolo
POTENTIAL investors in the East African Community trading bloc may now have a good reason to smile, thanks to the partner states agreement to avoid double taxation.
The five EAC member countries have signed an agreement to avoid double taxation seeking to boost investment flow in the region.
The pact stipulates that investors operating in two or more EAC countries will only pay in one jurisdiction.
The Secretary General of the EAC Ambassador Juma V. Mwapachu was quoted last week by the influential EASTAFRICAN weekly as saying that he was optimistic that the move will attract more investors into trading bloc, which has a GDP of USD 80 billion and a population of 133 million people to make a vibrant common market.
He said the EAC partner states of Kenya, Uganda, Tanzania, Rwanda and Burundi entered into double taxation deal partly in order to attract investors by mitigating the taxation effects or investment capital.
The EAC Heads of states hailed the pact during their recent one day summit held at the Ngurdoto Mountain Lodge in Arusha, Tanzania and said the agreement will boost intra-EAC trade.
The ambitious agreement had earlier been concluded and signed by the 21st session of the Council of Ministers held in Arusha.
A prominent tax expert said that double taxation occurs when two different countries levy a similar tax on the same transaction or income.
Double taxation has been blacklisted as the most notorious stumbling block threatening intra-EAC-trade in the region.
The bloc’s intra-trade at the moment stands at 13 per cent of the total trade volume, against the 87 per cent of business quantity that gives to the outside world. In the European Union for example, intra-trade accounts for 60 per cent of the total trade,while trade within the North America Free Trade Area accounts for 48 per cent of the total trade of its member states.
Trade specialist attached to the East African Business Council {EABC} Mr Adrian Njau was last week quoted as saying that the intra-EAC-trade is sure-way of creating jobs, spurring production and investment flows and raising more taxes, the key aspects for any economic growth.
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