EAC considers model agreement to tackle double taxation
The East African Community Secretariat and German Development Cooperation through the EAC/GIZ Programme on East African Regional Integration are jointly conducting a validation workshop of a study on Code of Conduct against Harmful Tax Competition and Model Agreement on Double Taxation Avoidance this week. The workshop takes place 8 to 9 April at the Mount Meru Hotel in Arusha.
At the workshop, Senior Officials and legal advisors from tax authorities and Ministries of Finance in the EAC Partner States, as well as representatives from the private sector, will review a draft Model Agreement on Double Taxation Avoidance among EAC Partner States and non-EAC countries plus an EAC Code of Conduct against harmful tax competition among the EAC Partner States.
Avoidance of harmful tax competition and double taxation among the EAC Partner States are both crucial for the success of the Common Market. Therefore the EAC, supported by German Development Cooperation, has commissioned an extensive study on the topic which will be discussed by experts from Partners States and other stakeholders.
The study developed a model agreement on double taxation avoidance providing a guideline for all Partner States when negotiating or updating DTAs with non-member countries. The study provides an inventory of the existing DTAs between EAC countries and third parties and compares convergences and divergences in areas such as interest royalties, technical and management fees, employment income, dividends etc. It also establishes whether the provisions, especially those on the exchange of information among tax authorities, are in line with international standards.
The study also examines harmful tax regimes, recommends possible counter measures and lists best practices. Examples of harmful tax regimes are low effective tax rates, lack of transparency and lack of information exchange, artificial definition of a tax base, state aid and subsidies, failure to adhere to international transfer pricing guidelines and secrecy provisions. All of these exist within the EAC and therefore give rise to harmful tax competition among the EAC Partner States.
By: East African Community (EAC)
This article was originally posted on Africa Marketing Communications
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