This paper is a contribution to the current debate on the need for EAC harmonisation of domestic taxes. It provides evidence on existing tax systems and identifies the current tax obstacles to cross-border investment within the EAC.

Estimates of effective tax rates:

The paper offers estimates of the current effective tax rates on domestic and international corporate investment in the EAC. These estimates reveal substantial variation in effective tax rates across EAC member states, particularly for corporate income tax. The paper shows that most of this variation can be traced to differences in statutory corporate tax rates.

Harmonisation pathways:

It considers the issue of tax base versus tax rate harmonisation and discusses alternative routes towards an improved harmonisation of corporate (and consumption) tax systems in the EAC.