Customs Union : can also contribute to increase tax revenues in Burundi

Par [Nadine Nkengurutse] [Pierre Claver Nsengiyumva]
mardi 12 juin 2012         à 21 : 41 : 08

The Customs Union is the first step in regional integration ; it is in effect in the EAC since 2005 and operational in Burundi since July 2009. It provides for the free movement of goods. In order to be effective, the free movement of goods needs some accompanying measures that have been approved by the 5 partner States.

Kanyaru, Burundi-Rwanda border ©Iwacu

Amongst them, the Elimination of tariffs (25 or 10%) according to the nature of the product) on products originating from the East African community, the application of a common external tariff (CET) for products coming from countries outside the EAC, the modification of the taxable basis for the calculation of customs duties, the harmonization of management procedures among member countries, etc.

However, the Customs Union is not yet effective on all cited measures. "Paradoxically OBR believes that revenues have increased." "The Customs Union should have a positive impact on revenues because it increases the speed of movement of goods," said Joas Katanga, Director of ports and borders.
According to him, his office recorded an important increase of imports over a short period of time. “As long as taxes are not yet harmonized, there is risk to lose for the profit of another country,".

In addition to the speed of movement of goods to compensate customs duties abandoned, internal taxes have increased. "In a short term, there is sacrifice of revenue." "But they are offset by VAT (value added tax) which is a national tax", he says. Moreover, according to this official, fraud reduction resulted in tax revenue increase. "Through computerization, the fraud was reduced to a very significant percentage in 2012", he assures. Without giving figures, he says that there are more cases of trucks caught when trying to escape from the tax authorities. And he added : " This is another gain in revenue collection. "

Joas Katanga, Director of ports and borders ©Iwacu

Fear for a single customs territory

When the customs union will become effective, customs paperwork will be done in one place. All taxes will be collected at one port of entry of the goods and the revenue will be shared between the Member States of the community. On this point, Burundi fears for its internal taxes : "as long as taxes are not yet harmonized, there is a risk to lose them to the profit of another country," said Mr. Katanga.

He indicates that Burundi could lose, in case rates of internal taxes of the country- that is home to the port of clearance- would be lower than those applied in Burundi. In this respect, he argues that negotiations between the EAC countries are underway.
Merchants are also in agreement on the fact that the speed of movement of goods and the fight against fraud could raise the level of revenues. But, they deplore the lack of transparency in the system of taxation of the OBR. "We can pay, today, BIF 5 million of taxes for goods and, one day, we were asked BIF 10 million for the same commodity." "This is incredible," said Martin Sindahebura, Vice President of the SYGECO (Businessmen Trade Union).