The East African Community (EAC) is planning to set up a borderless trading system, which allows the clearing of all imports and exports at a single point, to stren gthen the implementation of its Customs Union, officials said here.
Kenneth Bagamuhunda, the EAC Director of Customs, said the African Development B ank (AfDB) had already provided US$3.5 million to support the studies leading to the establishment of the central impor t clearance system for the five-country economic bloc. “We are going to assess the viability of creating a strong customs territory, wh ich will address the issues related to the collection of taxes.
We are working on a mechanism to see whether revenue can be collected at the por t of entry or at the destination,” Bagamuhunda told PANA on the sidelines of a day-long media workshop here Monday.
Kenya uses a revenue collection system, known as SIMBA, and EAC officials said t he SIMBA system was compatible with the revenue gathering software also used by the Tanzanian and the Ugandan governments, which would enable the i nterlinkage.
“The two revenue systems of the EAC states can interlink. We want a sustainable model for all the states of the EAC to enable the goods to be cleared from one port of entry so that the cleared goods would be accepted in all other state s,” Bagamuhunda said.
He said the five EAC members, including Rwanda and Burundi, would jointly create a common goods clearing system where all the states would be required to provid e all customs documentation for the clearance of goods destined for their markets .
The EAC states have been implementing the Customs Union since 2005.
The treaty harmonised the taxation regime for the three original members of the sub-regional economic and political bloc – Kenya, Uganda and Tanzania – to 25% f o r all industrial goods and 10% for semi-processed goods. All raw materials are to be imported at no duty. Although experts argue that the 25% taxation on all imported industrial goods is making the region an expensive production hub, the EAC states are still deeply d ivided on whether it should increase the tax upwards or downwards to make the co s t of production lower.
Meanwhile, the region’s Council of Ministers have been working to gradually redu ce taxation on some key industrial products and inputs to keep the region’s feeb l e manufacturing sector alive.
Kenyan government officials said the EAC ministers had over the past year agreed on the reduction of the cost of imported finished products such as cement, pain t s and other emergency goods for use during national disasters like floods.
Bagamuhunda confirmed that the three states currently implementing the customs u nion had drastically reduced the cost of manufacturing in the region for produce r s of certain industrial goods such as paint.
Kenya’s East African Community Minister Amason Kingi attended the media sensitis ation workshop.