East Africa: Impact of Tax Incentives and Tax agreements on sustainable development

Published on 
07/16/2018
On 12-13 June this year, the Global Alliance for Tax Justice Africa regional network Tax Justice Network Africa, in collaboration with FES Tanzania, organized an East Africa Community (EAC) Regional dialogue in Dar Es Salaam, Tanzania. The aim of the dialogue was geared towards promoting an understanding of the policy consideration when putting in place tax incentive and Double tax agreement regimes, with focus on East Africa Region.
Participants were drawn from academia, policy makers, revenue authorities, extractive experts, civil society and other relevant players from EAC Countries: Burundi, Uganda, Rwanda, Kenya, Tanzania and South Sudan. The dialogue also involved East Africa Legislative Assembly and EAC Secretariat representatives.
The specific objectives of the meeting were to:
  • Develop joint policy positions on double tax agreements and tax incentives that will be used for future advocacy,
  • Strategize on the legislative process that should put in place at both national and regional level towards putting in place efficient and effective DTAs and tax incentives,
  • Identify opportunities and spaces to inform the ongoing reforms on tax agreement negotiations and tax incentive regimes.
During the dialogue the current tax incentive and tax agreements policy regimes in East Africa were discussed and whether they are beneficial in promoting development or not. Double Tax Agreements (DTAs) and tax incentives have been identified and popularly used as the quick and easy policy tools to use in promoting FDIs and international trade. These regimes should help realise the potential of having the extractive sector working for the people of Africa.
Each session was preceded by brief reflection of the practice a from selected presenter, on what works and what does not work - then rounded up by an open plenary discussion.

The sessions covered the following topics:

  • Big Picture – Nexus between taxation and Investments;
  • The Good, the Bad, and the Ugly: How Double Tax Agreements impact economic developments/investments;
  • Political or Economic tool? The policy drive in the use of tax incentives in East Africa;
  • The Cost – Benefit Analysis - Country experience on the effectiveness and efficiency of Double tax agreements;
  • Curse of Riches! What are we missing? - The nexus between tax agreement, tax incentives and extractives;
  • Race to the Bottom! Reality or Fallacy!What next for tax incentive Country experiences.
Some of the outcomes of the meeting included:
  • Deepened understanding on the dangers of haphazard tax agreements and incentives targeted at the extractive sector extended by government to financing development.
  • Strategy on the legislative process that should be adopted in negotiating for effective and efficient tax agreements and tax incentives.
  • Identification of the available opportunities and spaces to influence in the ongoing reforms on tax agreement and tax incentives.

For more information please feel free to contact Tax Justice Network Africa's Jared Maranga.

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