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Value Added Tax (VAT)

The East African Community Partner States have prioritized the harmonization of taxation regimes as one way of promoting investment into the region.

Value-added Tax is a type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale.

Value-added tax (VAT) is a simple tax structure that is transparent, easily identifiable and computable.

The purpose of VAT is to generate tax revenues to the government similar to the corporate income tax or the personal income tax.

The differences in VAT administration across the EAC range from disparities in the VAT rates, from 16 per cent in Kenya to 18 per cent in Uganda, Tanzania and Rwanda. The 2% difference has an impact on the affordability of goods and services in the various countries and can influence investment decisions due to its impact on profitability.

Harmonization of VAT law across the region will benefit taxpayers through a simplified tax system, and the government through enhanced revenue collection.