Arusha, Tanzania – 18th April 2026: The East African private sector has called for urgent harmonisation of tax proposals and fiscal measures ahead of the 2026/27 national budgets, in response to ongoing geopolitical tensions in the Middle East, to cushion businesses from external shocks, enhance regional competitiveness, boost intra-regional trade, and attract investment.
This call was made during the EABC Pre-Budget Webinar 2026/27 themed “Harmonizing Tax Proposals for a Competitive and Integrated EAC Market,” convened by the East African Business Council (EABC) in collaboration with PwC on 16th April 2026.
In his remarks, Mr. Simon Kaheru, EABC Vice Chairperson, called for tax measures in the 2026/2027 budgets to be aligned to create a more conducive business environment amid global geopolitical tensions that continue to impact economies through rising fuel and logistics costs, affecting manufacturing and other economic sectors. He emphasized the importance of adopting tax policies that promote intra-regional trade, eliminate discriminatory practices, and support SMEs.
On his part, Mr. Ahmed Farah, EABC Executive Director, stated: “We commend the continued joint reading of budgets by East African Partner States as a step toward fiscal harmonization. However, persistent divergences in the application of the Common External Tariff and domestic taxes continue to undermine regional integration.”
“As we approach the 2026/2027 budgets, Partner States must align tax measures with regional commitments, eliminate discriminatory practices, and create a more predictable, business-friendly environment.”
EAC Deputy Secretary General Annette Ssemuwemba underscored that tax harmonization is critical to achieving a competitive regional market.
“Tax policy harmonization must be understood not as a technical exercise, but as a strategic tool for building a competitive and truly integrated regional market,” she said.
“Differences in VAT, excise duties, and withholding taxes continue to distort business decisions and increase the cost of cross-border trade.”
The Chief Guest, Ms. Annette Mutaawe Ssemuwemba, EAC Deputy Secretary-General: Customs, Trade, and Monetary Affairs, stated: “Tax policy harmonization must be understood not as a technical alignment exercise, but as a strategic tool for building a competitive and truly integrated regional market.”
“As Partner States finalize the 2026/2027 budgets, it is critical to align fiscal measures to balance revenue needs with growth, eliminate non-tariff barriers caused by discriminatory taxes, while advancing predictable, forward-looking tax systems in emerging areas of the digital economy to enhance the region’s competitiveness,” she said.
Non-harmonization of domestic taxes continues to shape business decisions, leading to uneven cost structures, cash flow challenges, and increased complexity in cross-border operations. The Common External Tariff remains a cornerstone of the Customs Union, but the increasing use of stays of application, while providing necessary flexibility, introduces uncertainty for investors and affects predictability in the regional tariff regime.
Mr. Jonathan Sessanga, EAC Principal Customs Officer – Information Technology, presented on the status and challenges in the implementation of the EAC Common External Tariff (CET) and progress in the harmonization of excise duties within the EAC. The approved 2025/2026 measures, drawn from EAC Legal Notice No. EAC/171/2025 of 30th June 2025 and national Finance Acts, indicate that over 2,464 tariff lines (41.3%) were adjusted through stays of application or duty remissions. This trend undermines the “common” nature of the CET, reducing its effectiveness as a tool guiding taxation on imported goods outside the EAC region and the protection of EAC industries.
PwC experts presented on private sector proposals for the 2026/27 national budgets, noting that budget-making processes across the EAC also vary in terms of timelines and stakeholder engagement. While most countries implement Finance Act changes effective 1 July, differences exist in submission deadlines, consultation periods, and legislative procedures, which can affect the predictability and transparency of tax policy changes.
Summary of East African Community (EAC) Private Sector Tax Reform Proposals (2026/27 & Ongoing Reforms)
Tanzania – Proposed Measures (2026/27)
Tax Administration:
- Improve budget consultation timelines (currently inadequate)
- Set 30-day timeline for providing information to tax authorities (+ possible 15-day extension)
- Address interest accumulation during tax dispute resolution
Income Tax
- Clarify deemed dividend rules (Section 33A ITA): define “profit,” specify application conditions, and allow justification for retained earnings
- Apply foreign exchange realization basis only to long-term loans
- Improve clarity on treatment of bad debt provisions (impairment)
SDL & WCF (Payroll Taxes)
- Reduce Skills Development Levy (SDL) from 3.5% to 2.5%
- 2% to VETA
- 0.5% to WCF
- Abolish separate WCF contribution
- Exempt SMEs from SDL
Value Added Tax (VAT)
- Remove expiry (June 2026) on VAT deferment for imported capital goods
- Clarify definition of “entertainment” to include legitimate staff costs (food/accommodation in remote areas)
- Clarify VAT responsibility for digital platforms (ESS rules)
- Allow input VAT claims/refunds for intending traders
- Clarify VAT treatment of subcontracted transit services
Excise Duty
- Introduce modern excise legislation
- Remove or offset excise on intermediary services
- Reassess policy after 3-year excise freeze ends
- Reduce excise on electronic communication services from 17% to ~14%
Kenya – Proposed Measures (Finance Bill 2026)
Income Tax
- Extend tax loss carry-forward from 5 to 10 years
- Exclude non-cash/unrealised items from repatriated income
- Align Significant Economic Presence Tax (SEPT) thresholds with VAT
Employment Tax
- Increase tax-free threshold
- Widen tax bands to ease burden on low- and middle-income earners
- Restore pension and death benefit exemptions
Tax Administration
- Extend withholding tax remittance deadline to 20 days
- Introduce deemed approval for tax exemptions if delays exceed 90 days
VAT
- Transitional fix for reduced refund window (24 to 12 months)
- Remove mandatory VAT registration for non-resident digital suppliers
- Review VAT on fuel and petroleum products
- Shorten VAT refund timelines for bad debts
- Review VAT registration threshold (KES 5 million)
- Rationalize exempt and zero-rated schedules
Excise Duty
- Exempt SACCO member fees from excise (mutuality principle)
Uganda – Proposed Measures (2026 Bills)
Tax Administration
- Reduce penalties for digital tax stamp non-compliance
- Waive tax liabilities outstanding since 2016
- Introduce penalties for:
- Non-use of EFRIS (e-invoicing)
- Failure to issue e-receipts
Income Tax
- Expand royalty definition to include software payments
- Replace 5% Digital Services Tax with 15% withholding tax
- Introduce minimum tax: 0.5% of gross income or 30% of chargeable income after 7 years of losses
- Introduce 6% withholding tax on non-business asset purchases
- Allow bad debt deductions for microfinance institutions
- Expand WHT on telecom commissions
- Make selected WHTs final taxes (telecom, insurance agents)
- Introduce:
- 6% WHT on entertainers
- 5% WHT on interest paid to foreign financial institutions
- Tax foreign income of residents
- Adjust PAYE rates for modest relief
VAT
- Increase VAT registration threshold from UGX 150M to UGX 250M
- Expand VAT deferment to mining inputs
- Exempt VAT withholding where e-invoice is issued
- Reduce refund threshold from UGX 5M to UGX 2M
- Introduce input tax credit for tourism/hotel developers
- Exempt selected goods (solar lanterns, biomass pellets)
Stamp Duty
- Increase asset transfer duty from 1.5% to 3%
- Introduce monthly filing requirement for financial institutions
- Introduce stamp duty on vehicle registration
- Require record retention for 5 years
Excise Duty
- Multiple rate adjustments across product categories
External Trade
- Exempt medical and agricultural imports from import declaration fee and infrastructure levy
- Increase environmental levy on used clothes from 15% to 30%
Rwanda – Ongoing Tax Reform Programme (2024–2030)
Key Objectives
- Broaden tax base by reducing exemptions
- Improve fairness and competitiveness
- Increase domestic revenue mobilisation
- Promote public health
2025/26
- Increase capital gains tax from 5% to 10% and expand scope
- Introduce Digital Services Tax (1.5%)
- Remove VAT exemptions on ICT equipment and SIM cards
- Increase excise on airtime from 10% to 12%
- Introduce tourism levy (3%)
- Increase gaming taxes significantly
2026/27
- Remove VAT exemptions on:
- Transport of goods by land
- Capital goods, machinery, and raw materials
- Increase airtime excise from 12% to 14%
2027/28
- Introduce excise on financial transactions (15%)
- Increase pension contributions from 6% to 8%
- Raise airtime excise to 15%
2028/29
- Remove VAT exemptions on:
- Electric vehicles
- Energy equipment
