EAC states adopt import tax measures to protect local production

EAC heads of state and government

The East African Community has developed new import tax changes to improve production in the region.

Kenya, Burundi, Rwanda, Tanzania and Uganda have now adopted a Common External Tariff that took effect on July 1 after being approved in a pre-budget consultations by respective Finance ministers on May 13.

“The duty remission measures adopted by the EAC partner states will ensure that local manufacturers can import raw materials and inputs which are not available in the region at a lower rate,” East African Business Council executive director Peter Mathuki said in a statement.

This seeks to safeguard manufacturers of a certain products against similar cheap imports.

Some of the targeted  products include textile (garments) and textile products; leather (shoes) and leather products, edible oil; tiles, processed tea, coffee and cocoa, meat and meat products and steel articles, iron and metal products.

Applying a lower duty rate is informed by the fact that the region has no sufficient capacity to produce particular products, hence the need to protect East Africans against a higher import duty.

The CET is currently structured under three bands of 25 per cent for finished goods, 10 per cent for intermediate goods and zero per cent for raw materials and capital goods.

There are products under the list that attract rates above the maximum rate of 25 per cent, ranging from 35 per cent to 100 per cent.

Kenya will now maintain application of the EAC CET at rate of 25 per cent and apply a duty rate of 25 per cent on margarine; edible mixtures, for one year. It has also assigned apparel and clothing accessories, knitted or crocheted and articles of apparel and clothing accessories, not knitted or crocheted, as sensitive for Kenya for one year and will apply a duty rate of 35 per cent.

The duty remission measures are specific for the gazetted manufacturers who applied for the importation of a specific amount of input, product at the reduced import duty rate.

The stays of application measures instituted on final products are reported in two scenarios.

One, where EAC states agreed to stay application of the CET rate and apply a higher duty rate for the imported products. And two, where the partner states agreed to stay the CET application rate and apply a lower duty rate for imported products.

The decisions to stay application of the CET rate and apply a higher duty rate are aiming at stimulating local production by safeguarding manufacturing of that particular product against similar cheap imports.

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