Income Tax In The East African Community: A Case For Harmonisation And Consolidation Of Policy And Law With A Focus On Corporate Income Taxation
This study seeks to make a case for a harmonised and consolidated corporate income tax law in the East African Community (EAC) as a step towards removing the problems caused by heterogeneity in corporate income taxation within its Common Market and the attainment of the progressive integration levels. It is the argument of this thesis that the policy and legal differentiation of the income taxes is counterproductive and contrary to the tenets of regional (economic) integration as it causes fiscal distortions, trade diversion, revenue erosion, harmful tax competition, double taxation and other effects. It looks at corporate income tax policy harmonisation as an antecedent to a harmonised corporate income tax law and the Corporate Income Tax (CIT) is pursued as an illustration of the would be bigger picture of harmonising the entire income taxation laws of the member states. This analysis is considered against the backdrop of the historical antecedents to integration covered by the EAC of 1967-1977. Comparative parallels from the European Union (EU) and North American Free Trade Area (NAFTA) regions which support tax harmonisation are also analysed to provide some insightful lessons for the EAC initiative. Consequently, the thesis proposes the adoption an EAC Common Consolidated Corporate Tax Base (CCCTB) as the first tool of harmonisation of CIT bases in order to overcome some of the challenges of heterogeneity. In a nutshell, the study advocates for a radical move from the current state of heterogeneity in income taxation to a harmonised regime as exemplified in the study of corporate income tax systems within the East African region.
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