SERENGETI Breweries Limited (SBL) has called on speedy tax harmonisation among the East African Community (EAC) partner states in order to have a steady flow of investment and free movement of goods and services.
“Though some significant ground has been covered, the prevailing barriers to trade needed to be quickly addressed,” said the SBL Managing Director, Mark Ocitti while speaking at the High Level East African Business and Investment Summit in Arusha to mark the 20 years of EAC regional integration process, themed the ‘Private Sector-Driven Integration’.
The different interpretation of EAC treaty Article terms such as ‘import’ by EAC Partner States had led to the higher domestic taxes charged on goods originating among EAC countries, a protectionist move that has lowered intra-EAC trade’.
“The list of stays of implementation continue to grow due to concerns in terms of economic asymmetry between EAC member states in terms of revenue considerations, support for infant industries; affordability, high quality and sufficient availability of inputs, focus on growing competitive upstream industries and supply of high quality products at affordable prices for consumers. Schemes such as Duty Remission Schemes continue to play a crucial role in supporting manufacturing in EAC,” he said.
Explaining on the impact of the current state on the brewing industry, Ocitti noted that differences in the domestic taxation regime has led to increase in contraband alcoholic product, adding that there remains a challenge in implementation formula for harmonisation of domestic tax regime because EAC countries are at different levels of economic development and there is no EAC Legal framework to drive commitment for change.
On fast-tracking the harmonisation process, “The slow review process of EAC Customs Union protocol instruments such as EAC is affecting the development of certain value chains and over-reliance on the EAC pre-budget process for import duty review of certain products. However, since last year, there has been a good traction by EAC partner states agreeing on a four-band structure of 0 per cent, 10 per cent, 25 per cent and 35 per cent”.
Elaborating on how East African Breweries Limited (EABL)-whose SBL is a subsidiary-is affected by the current state of affairs, Ocitti opined that courtesy of its unique position of having subsidiaries in Kenya, Tanzania and Uganda (Uganda Breweries Limited-UBL)-the regional beer-maker’s risk associated with lack of harmonisation are minimized because a lot of its products are produced at the local level.