EAC states to develop common digital taxation framework
KRA Commissioner General Githii Mburu.
Countries in the Eastern African Community (EAC) have resolved to come up with a joint strategy for taxing the digital economy.
Revenue authority bosses from the seven tax administrations agreed that such a policy decision would help, especially since it would regularise issues of legal framework such as identifying players in the sector and the legal mechanisms.
“The meeting discussed a number of emerging issues that continue to affect the tax administrations and agreed to develop a joint strategy for the East African revenue authorities to address taxation of the digital economy...Other administrative issues to be addressed include leveraging on technology and building technical skills,” a communique sent after the meeting on Wednesday stated.
The resolution comes just days after the Kenya Revenue Authority (KRA) announced it would start taxing online transactions beginning January 2021.
The seven heads of tax administrations also resolved to engage the EAC on the need to establish a committee on tax affairs, where matters relating to tax and other administrative issues not related to Customs can be handled.
The seven — Audace Niyonzima (Burundi), Pascal Ruganintwali (Rwanda), Patrick Mugoya (South Sudan), Alfred Mregi (Tanzania), John R. Musinguzi (Uganda), Joseph A. Meza (Zanzibar) and Githii Mburu (Kenya) — held a virtual meeting on Wednesday afternoon.
Lifestyle audits
They also agreed that their workers in the various tax administrations will undergo lifestyle audits.
“Commissioners general directed that in order to improve the integrity of staff in the revenue authorities, lifestyle audits should be conducted across the region,” the communique stated.
The EAC secretariat was also tasked with coming up with an agreed framework on addressing illicit outflows as multinationals operating in the region siphon cash out of East African economies through profit shifting.
“The framework should address base erosion and profit shifting and illicit financial flows within the East African Community. This will be addressed through legislation covering the various business models and administrative measures.”
Respective governments are also to fund EAC secretariat to establish a regional electronic cargo tracking system.
All revenue authorities in the region have reported declining performance between March and September due to the impact of Covid-19 on economies.
