Latest news with #SCTIFI
Zawya
17-06-2025
- Business
- Zawya
EAC's invisible walls: Why intra-trade remains stubbornly at 15pc?
The East African Community (EAC) Council of Ministers has received a report on a fresh surge in non-tariff barriers to trade in the regional bloc, largely fuelled by contradictory domestic taxes. The EAC Sectoral Council of the Ministers of Trade, Industry, Finance and Investment (SCTIFI) says the number of non-tariff barriers (NTBs) within the bloc increased from 10 in November 2024 to 48 in May 2025, reflecting the challenges member states are facing trading with one another. This has left the intra-EAC trade stagnant at 15 percent. NTBs have impacted trade in various goods and services, including sugar, milk, soft drinks, beer, cement, clinker, road user charges, paints and varnishes, fish, and forest and timber products, according to disclosures by the council. Read: Ugandan traders bemoan erratic road fees on EAC trade routesThe ministers blamed the resurgence of NTBs in the region on the continued enactment of discriminatory laws and regulations by member states. This has led to violations of the national treatment principle and the non-notification of such breaches and the partial implementation of partner states' commitments to EAC integration, including non-resolution of NTBs and the imposition of new ones, which contravenes EAC laws. Other major causes are non-harmonisation of policies and regulations among partner states, especially fees, levies and charges and the non-timely resolution of reported NTBs. Read: EAC is not treating us well, say Rwandan tradersThe meeting noted that of the 48 NTBs, 18 were resolved, 22 are at various stages of resolution, two were operational and were referred to the relevant committees for consideration, and that six were not bona fide. By November 2023, 269 NTBs had been resolved, leaving only nine were outstanding. The resurgence of NTBs raises concerns about the partner states' commitment to regional integration and the promotion of intra-EAC trade. Domestic taxesThe EAC Secretariat says intra-EAC trade has remained low, largely due to NTBs. EAC's total trade with the rest of the world increased by 2.37 percent to $80.6 billion in 2023 from $78.7 billion in 2022, while intra-EAC total trade grew by 13.1 percent to $12.1 billion from $10.6 billion in the same period. However, the percentage share of intra-EAC trade to bloc's total trade was 15 percent in 2023. NTBs have been a major hindrance to the free movement of goods as enshrined in the EAC Customs and Common Market protocols. Ordinarily, NTBs refer to any obstacles to international trade that are not import or export duties and may take the form of import quotas, subsidies, customs delays, technical barriers, or other systems preventing or impeding trade. According to the ministers, the number of NTBs were attributed to domestic taxes such as excise duties and other charges of equivalent effect and that a number of reported NTBs were operational related to service delivery and could be addressed through Trade Facilitation Committee rather than describing them as NTB. The council took note of the 18 resolved NTBs and directed partner states to refrain from enacting laws that impose fees, levies and charges of equivalent effect on goods originating from the bloc and to refrain from imposing quotas on goods originating from the bloc. It also directed the partner states to make budgetary allocation to undertake activities related to the resolution of NTBs and that the EAC Secretariat should convene and coordinate the bilateral engagements among partner states on specific NTBs as they occur in order to resolve them promptly. Customs UnionThe council also directed partner states to treat goods from the region as transfers and refrain from enacting discriminatory laws that treat EAC originating goods as imports and that partner states should timely notify the EAC Secretariat in a timely manner of any new measures that would affect trade. The Customs Union is the first pillar of the EAC regional integration that provides for free movement of goods and services in the region by eliminating trade barriers and fostering a competitive environment for goods produced within the region. Under the region's revised four-band Common External Tariff (CET), which took effect on July 1, 2022, finished products imported from countries outside the bloc attract a 35 percent duty, intermediate products available in the EAC 25 percent, intermediate products not available in the region 10 percent and raw materials and capital goods attract a zero percent import duty. Additionally, there is a list of sensitive items, such as sugar, wheat, rice and milk, which attract a duty of more than 35 percent, to protect local industries from competition.
Zawya
12-06-2025
- Business
- Zawya
EAC ministers order probe on products requiring special tax treatment
East African Community (EAC) ministers have directed the Secretariat to institute measures aimed at abolishing special tax treatment for certain goods in the region in the next 12 months. The EAC Sectoral Council of the Ministers of Trade, Industry, Finance and Investment (SCTIFI) wants an investigation to ascertain the availability of these products in the region and the justification for the special treatment. They say applications for preferential tax treatment by member states must be backed by comprehensive and valid justification. This is in the latest attempt by the regional ministers to deal with persistent stays of application requests by member states, which are believed to be watering down the objectives of common external tariff (CET), including enhancing regional competitiveness and industrialisation. In a meeting held in Arusha May 26-30, the Council directed partner states to submit a list of not more than five products each, which are prone to preferential tax treatment and are available in sufficient quantities in the region by June 30, 2025. Read: EAC ministers suspend new levies on high-risk products pending reviewThe EAC Secretariat and the partner states are expected to undertake a regional study to establish the availability of the products manufactured within the region by the end of June 2026.'The meeting emphasised the need for justification for the requested stays prior to approval,' says according to the report of the meeting. The meeting noted that, despite the comprehensive review of the EAC Common External Tariff in May 2022 aimed at enhancing regional industrialisation, value addition and competitiveness, partner states have continued to submit numerous requests for stays of application on the same tariff lines.'This persistent trend suggests that national interests are still taking precedence over the agreed regional objectives, thereby undermining the uniform application and effectiveness of the revised CET,' says the report. Currently, there are 1,956 tariff lines under stays (22 percent of CET), with potential increase to over 2,000 lines (30 percent of CET).'This upward trajectory raises concerns and undermines the EAC CET,' the Council warns. They noted that some stays of applications were found to have minimal traffic, with transactions as low as $200. The EAC Council of Ministers, in April 2014, decided to do away with stays of applications and directed that a phase out proposal be developed, which was subsequently adopted by the Sectoral Council of the Ministers of Trade, Industry, Finance and Investment in May that year. But the directive is yet to be implemented, as countries still pursue this window of stays of applications and tax exemptions on various sensitive goods. It is argued that the excessive protection granted to sensitive goods should be removed and the products opened to competition, as most member states have abused this window. The EAC Council had agreed that the removal of stays of applications and duty remission inform the comprehensive review of tariffs. According to the ministers, the special tax treatment accorded to sensitive items is not anchored in the EAC Customs law and is stifling intra-regional trade. The ministers have proposed harmonisation of specific duty rates between partner states and verification of products where countries have sufficient production. In last year's budget, EAC ministers of finance agreed on duty remissions on raw materials and inputs used by local manufacturers to facilitate domestic production. Kenya was granted an extension of the current stay of application to import rice at a duty rate 35 percent or $200 per metric tonne, whichever is higher, for one year, instead of the EAC rate of 75 percent or $345 per metric tonne, whichever is higher, in order to meet local demand and enhance food security. It was also allowed to import wheat at a duty rate of 10 percent, instead of 35 percent for one year under the EAC Duty Remission Scheme. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
09-06-2025
- Business
- Zawya
EAC ministers suspend new levies on high-risk products pending review
East African Community finance ministers have suspended the implementation of new levies on lubricating oils, aluminium bars and active yeast, which are considered high-risk products, and referred the taxation proposal to the regional sectoral committee on customs for further analysis. The committee on customs is expected to report back to the finance ministers during the next pre-budget consultations meeting in May next year, according to the resolutions of the meeting by the EAC Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) held in Arusha, Tanzania, from 26-30 May. Read: EAC adopts new levies on 'high risk' products to curb unscrupulous tradersThe new rates had been planned to take effect from July 1 this year.'It was agreed that the matter be referred to the Sectoral Committee on Customs for further technical analysis and that the proposed specific duties be deferred pending the outcome of this review,' the report of the meeting states. During its 45th meeting held in November last year, SCTIFI adopted $0.46 per litre as a specific duty rate on lubricating oils so that the rate will be 25 percent or the $0.46, whichever is higher, and $700 per tonne as a specific duty rate on active yeast so that the rate will be 25 percent or the $700, whichever is higher. It also adopted $690 per tonne as a specific duty rate on aluminium bars, rods and profiles so that the rate will be 25 percent or the $ 690, whichever is higher. These duties followed a directive by the ministers of finance during the pre-budget consultations in May 2023 that required member states and the EAC Secretariat to identify high-risk products and assign a specific duty rate to address issues related to under-invoicing and undervaluation. The suspension of the proposed rates is expected to allow Tanzania more time to complete consultations with the relevant stakeholders on the proposed rates. It is also expected to allow the sectoral committee on customs to relook at additional factors such as whether the products are imported from the same country or countries of export and whether the imports occur at or about the same period. Read: Slow progress on harmonising standards affecting EAC tradeDuring the pre-budget consultations last month, Tanzania said that national consultations with relevant stakeholders had been concluded and highlighted the need to address a few outstanding issues before adoption of the proposed specific duty rates. The meeting agreed that a re-analysis should be undertaken to determine the identical nature of the products based on a number of parameters, such as the percentage of aluminium content relative to other metals in the alloy, the proportion of base oil relative to other additives or constituents (lubricating oils) and the material composition of the product (Active yeast). The finance ministers also noted that additional factors such as whether the products are imported from the same country of export and whether the imports occur at or about the same period should be considered. Customs valuation is a major feature and concern of modern customs tariff systems since it is important for assessment of customs duties for purposes of generating revenues or as a means of encouraging and protecting domestic industries. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. ( James Anyanzwa
Zawya
09-06-2025
- Business
- Zawya
Kenya's new ceramics tax irks partners
Kenya has imposed excise duty on ceramic tiles originating from Uganda and Tanzania, setting off fears of a potential trade dispute with Kampala and Dodoma terming the tax as 'discriminatory.'Uganda brough this up before the EAC Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) during a meeting in Arusha last month (May 26-30), saying it has affected Uganda originating ceramic tiles, in contravention of the principle of National Treatment as enshrined in Article 15 of the EAC Customs Union Protocol and contrary to the broader objectives of the EAC Customs Union. Kenya imposed five percent duty or Ksh200 ($1.55) per square metre on imported ceramic paving or tiles as part of a list of goods and services subject to new duties under the Tax Laws (Amendment) 2024 that came into effect in January. The EAC Secretariat said that a related issue had been raised by Tanzania in December 2024. AdjustmentsIt was noted that the matter was reported during the Regional Monitoring Committee and also during the Sectoral Committee on Trade held in May where Kenya promised policy adjustments to the national budget for the financial year 2025/2026. Kenya added that consultations were on, and an update would be provided during the 47th SCTIFI meeting but argued partner states have excise duty which does not conform to the provision of Article 15 of the Protocol establishing the EAC Customs Union. The meeting noted that many partner states have imposed excise duty on goods produced within the community which does not conform with the provisions of the EAC Customs Union. EAC Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) directed the EAC Secretariat to compile a list of all goods for which excise duty has been imposed contrary to Article 15 of the Protocol establishing the EAC Customs Union and convene an Extraordinary meeting of the EAC Sectoral Council on Finance and Economic Affairs to deliberate on the matter by end of July. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
