What You Need to Know
The East African private sector is advocating for the harmonization of tax proposals and fiscal measures ahead of the 2026-27 national budgets. This initiative aims to enhance regional competitiveness, boost intra-regional trade, and attract investment, particularly in light of ongoing geopolitical tensions affecting businesses.
Africa-Press – Kenya. The East African private sector has called for urgent harmonisation of tax proposals and fiscal measures ahead of the 2026-27 national budgets.
This is in response to ongoing geopolitical tensions in the Middle East, saying the move will help cushion businesses from external shocks, enhance regional competitiveness, boost intra-regional trade and attract investment.
Proposed measures for Kenya (Finance Bill 2026) includes reforms on income tax where they have called for an extension in tax loss carry-forward from five to 10 years.
The government should also consider excluding on-cash or unrealised items from repatriated income and align significant Economic Presence Tax (SEPT) thresholds with VAT.
On employment tax, they want an increase on tax-free threshold, widening tax bands to ease burden on low- and middle-income earners and restoration of pension and death benefit exemptions.
Kenya should also extend withholding tax remittance deadline to 20 days and introduce deemed approval for tax exemptions if delays exceed 90 days, they said.
For VAT, the private sector have called for transitional fix for reduced refund window (24 to 12 months), remove mandatory VAT registration for non-resident digital suppliers, a review of VAT on fuel and petroleum products and a shorter VAT refund timelines for bad debts.
They also want a review of VAT registration threshold (Sh5 million) and rationalisation of exempt and zero-rated schedules. Excise duty reforms are also needed especially on exempting SACCO member fees from excise (mutuality principle).
Proposed measures for Tanzania includes improvement in budget consultation timelines (currently inadequate), setting 30-day timeline for providing information to tax authorities (+ possible 15-day extension) and addressing of interest accumulation during tax dispute resolution.
They also want clarity on income tax on dividend rules, a reduction in skills development levy from 3.5 per cent to 2.5 per cent, removal of expiry (June 2026) on VAT deferment for imported capital goods and clarify on VAT responsibility for digital platforms, among others.
Private sector players also want Tanzania to introduce modern excise legislation, remove or offset excise on intermediary services, reassess policy after three -year excise freeze ends and reduce excise on electronic communication services from 17 per cent to 14 per cent.
Uganda on the other hand has been urged to reduce penalties for digital tax stamp non-compliance, waive tax liabilities outstanding since 2016 and introduce penalties for non-use of e-invoicing and failure to issue e-receipts.
For income tax, industry wants Uganda to expand royalty definition to include software payments, replace five per cent Digital Services Tax with 15 per cent withholding tax and introduce minimum tax-0.5 per cent of gross income or 30 per cent of chargeable income after seven years of losses.
It should also introduce a six per cent withholding tax on non-business asset purchases, allow bad debt deductions for microfinance institutions, and reforms in telecom commissions, withholding tax on entertainer, tax foreign income of residents and adjust PAYE rates for modest relief.
The private sector has also called for several reforms in VAT, stamp duty, excise duty and external trade, including exempting medical and agricultural imports from import declaration fee and infrastructure levy.
They also want environmental levy on used clothes increased from 15 per cent to 30 per cent.
Rwanda should broaden its tax base by reducing exemptions, improve fairness and competitiveness, increase domestic revenue mobilization and promote public health under the ongoing Tax Reform Programme (2024–2030).
This is alongside adjustments in several tax regimes such as increase capital gains tax from five per cent to 10 per cent, introduce Digital Services Tax (1.5%), removal of VAT exemptions on ICT equipment and SIM cards and increasing excise on airtime from 10 per cent to 12 per cent, among others.
“Partner states must align tax measures with regional commitments, eliminate discriminatory practices, and create a more predictable, business-friendly environment,” East African Business Council executive director, Ahmed Farah, said.
He noted that persistent divergences in the application of the Common External Tariff and domestic taxes continue to undermine regional integration.
EABC vice chairperson Simon Kaheru 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.
East African Community deputy secretary general Annette Ssemuwemba underscored that tax harmonisation is critical to achieving a competitive regional market.
“Tax policy harmonisation 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.”
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.
The East African Community (EAC) has long faced challenges related to tax harmonization among its member states. Discrepancies in tax policies have often hindered regional integration and economic cooperation. The call for harmonization comes as a response to the need for a more predictable and business-friendly environment, especially amid rising global economic pressures.
Historically, the EAC has aimed to create a unified market, yet varying tax regimes have created barriers to trade and investment. The private sector’s push for alignment in tax measures reflects a growing recognition of the importance of cohesive fiscal policies in fostering economic resilience and competitiveness across
