East African Community (EAC) to increase taxation on textiles imported
In order to protect and improve home-grown textile industry in the Member States—Burundi, Kenya and Rwanda, the East African Community (EAC) has recently announced plans that the taxes charged on the imported textiles will rise between 30 and 35%.
Regional companies from the private sector are seeking a 32.5% duties on domestic finished products, which will be proposed for discussion at the next EAC Heads of State Summit. Regional tax changes would raise import taxes on goods such as iron, steel, wood and wood.
In review of the European Capital Coast Tariff, Member States agreed to move from a three-band system to a new four-band tariff structure, but failed. According to the EAC press release, to decide on the tariff rates for goods in the new band system. The three-band tariff system of the EAC came into force on 1 January 2005, with the result that 25%, 10% and duty-free raw materials were imported into the regional bloc.
The higher duty of over 25% to defend local producers from competition is attracted to sensitive products such as sugar, wheat, rice and milk. Recent trends have shown that secondhand imported apparel is now marked as 'sensitive,' which has raised tariffs relative to finished products.
A duty-free import tariff on commodities and capital goods will be included in the new four-band tariff structure, 10% import duty for intermediates not included in the EAC and 25% import duty for intermediate goods in the area.
EAC, the region's largest body of private sector organizations, introduced a fourth band for finished products at a cost of 32.5 percent but partner countries disagreed with the highest rates of finished products.
EAC member states submitted 1,294 goods to consider paying above the 25 per cent limit at a February meeting held in Zanzibar. Of this, 327 tariff lines were accepted and 566 goods were maintained at their current rate. However, there was no 401 tariff lines agreement, which is still being taken into account.
Uganda has launched a cotton, textiles and clothing strategy last month with the goal of rising cotton fiber growth, increase household added value and create jobs. The Scheme is promoting the third edition of the NDPIII.
Recent research by the EAC Secretariat on value chains for cotton, textiles and garments has shown that it can become a major player in the regional industry and is expected to reach $3 billion in 2025.