Trading in the EAC (FAQs)

The East African Community (EAC) was originally founded in 1967 and dissolved in 1977.1The EAC was revived on 30 November 1999, with the signing of the Treaty for the Establishment of the East African Community in Arusha, Tanzania. The treaty entered into force on 7 July 2000.

Level 1 –Free Trade Area: A group of countries committed to removing all barriers to the free flow of goods and services between each other, but pursuing independent trade policies with countries outside the Free Trade Area.

Level 2–Customs Union: A form of trade agreement between a group of countries where the countries decide not to impose tariffs (taxes on imports) on each other’s goods and agree to impose the same tariff rates on goods entering the Customs Union from the rest of the world (also known as a Common External Tariff).

Level 3–Common Market: A form of regional economic integration where a group of countries come to an agreement to operate as a single market with free movement of goods, services, people, labor and capital (money) within their shared borders. The East African Community, made up of Burundi, Kenya, Rwanda, the United Republic of Tanzania, South Sudan and Uganda is an example of a Common Market.

Level 4–Monetary Union: A form of regional economic integration where a group of countries agree to share the same currency and coordinate their national monetary policies. The European Union is an example of a Monetary Union. The EAC Partner States signed the EA Monetary Union Protocol in November 2013 2. The protocol lays the groundwork for a monetary union within ten years of its signing.

Level 5–Political Federation: A political entity characterized by a union of partially self-governing states or regions under a central (federal) government. Political Federations the ultimate goal of the EAC regional integration process. It is the fourth step of integration following the Customs Union, Common Market and Monetary Union. The Political Federation will be founded on three pillars – common foreign and security policies, good governance and effective implementation of the prior stages of regional integration.

The Common Market Protocol (CMP) outlines the policies, rules and regulations that govern the EAC Common Market, made up of Burundi, Kenya, Rwanda, South Sudan, the United Republic of Tanzania and Uganda. The protocol documents the freedoms and rights that are awarded to all citizens of East Africa. As a Ugandan, and therefore an East African, the CMP provides you with the following five freedoms:

1) Free Movement of Goods

2) Free Movement of Services

3) Free Movement of People

4) Free Movement of Labor

5) Free Movement of Capital and the following two rights: 1) Right of Establishment, 2) Right of Residence.

No entry or exit fee is required when moving between EAC countries. If you wish to enter another EAC country, you must present a valid
1 http://www.uneca.org/oria/pages/eac-%E2%80%93-east-african-community
2 http://www.eac.int/integration-pillars/monetary-union
3 http://www.eac.int/integration-pillars/political-federation

Common, standard travel document to the Immigration Officer at the official border point. This could be a Uganda National Passport or an EAC Passport. Additionally, for travel between Kenya, Rwanda and Uganda, an East African citizen may use an Inter State Pass issued at the border of exit and used alongside a national identification card or a voter’s card. The Inter State Pass is issued free of charge.

Uganda Revenue Authority and police officers have the right to confiscate goods on the prohibited goods list. These are goods that are banned by the Government of Uganda. Each EAC country has a list of prohibited goods. It is illegal to import goods on any country’s prohibited list.

The list includes false money and counterfeit currency, pornographic materials, matches containing white phosphorous, distilled beverages containing essential oils or chemical products, which are harmful to the health, narcotic drugs, hazardous wastes, soaps and cosmetic products containing mercury, used tires for commercial and passenger vehicles and counterfeit goods. If a URA officer or a police officer has reason to believe that your goods are on the prohibited list or that they were brought into the country illegally (i.e. smuggled) and not cleared through the formal border, then the officer has the right to confiscate the goods. They are however, required to provide you with an explanation for their actions.

You are only required to pay fees at the border when clearing the goods through the border crossing. Any fees that you are asked to pay while travelling to the border are likely to be bribes and are illegal. Local councils may demand payment for goods that you are transporting through their areas of control. This is not supposed to happen. You should report this whenever it happens through the national Non-Tariff Barrier Reporting System. To reach the system, dial *210# on your phone. The same number works on all networks.

The majority of goods imported from another EAC country into Uganda do not incur an import tariff (i.e. import tax). However there are other taxes which may apply to your consignment, such as excise tax (on luxury items like cigarettes and alcohol), Value Added Tax (VAT) (18 percent), withholding tax (6 percent) and infrastructure levy (1.5 percent). In addition some goods such as rice, wheat, maize and tobacco are considered sensitive goods. Items on the Sensitive List are commodities whose import has been restricted by the government in order to safeguard national interests and reserves or to protect local production. At times Uganda may raise import tariffs (i.e. Import taxes) on these goods, in order to discourage their import and / or local consumption. By raising the import tariffs on these items, the government also hopes to encourage the purchase of those goods from local producers. The list of sensitive goods includes rice, wheat, maize, sugar, tobacco, matches, khanga, kikoi, kitenge, worn clothing and textiles, Manganese Dioxide, Mercuric Oxide, Silver Oxide, Lithium, Air Zinc and other primary cells and batteries.

Import tariffs are taxes imposed on imported goods and services. Goods of East African origin do not attract import duties when imported into another East African country. Other tariffs paid at the border are typically referred to as domestic taxes and include Excise Duty, Value Added Tax (VAT) (18 percent), withholding tax (6percent) and infrastructure levy (1.5 percent).The application of these taxes depends on the value and types of goods being imported. Excise Duty is levied on luxurious goods including tobacco-based products and alcoholic beverages. The Excise Duty on cigarettes is 200 percent. VAT is a type of consumption tax that is placed on a product whenever value is added during a stage of production as well as at final product sale. Withholding tax is an income tax imposed on the projected income the importer will earn from the sale of the imports in Uganda. Withholding tax applies to all imports except the following categories: petroleum or petroleum products, machinery, human and animal drugs, scholastic materials, imports of exempt organizations/persons, raw materials imported by a manufacturer solely for generating finished products, an importer who the Commissioner General is satisfied has regularly complied with the Income tax obligations. The Infrastructure Levy is a tax applied to selected imports into the EAC in order to finance railway infrastructure development.

Uganda Revenue Authority is the best source of information for taxes on goods imported into Uganda. You may also use Sauti, a recently launched trade and market information platform for cross border traders. To use the platform, dial *210*35# (Uganda) and *483*35# (Kenya). You will be able to obtain estimated taxes on your imports.

Under the EAC Customs Union, the Simplified Trade Regime (STR) is a special provision that aims to make it easier and faster for traders with consignments valued under US$ 2,000 (or about UGX 7 million) to trade across EAC borders.

Under the STR, a trader with a qualifying consignment may obtain a Simplified Certificate of Origin (SCOO), which proves that the goods are of East African origin and therefore, qualify for zero rated import duties in the importing EAC country. The importer is however, required to prove that the goods are of East African origin. The SCOO is a one page form that is such easier and simpler to complete than the Certificate of Origin used for consignments with a value of over US$ 2,000. Furthermore, under the STR, a trader with a consignment of goods valued at under US$ 2,000 does not need the services of a clearing agent but, may approach URA directly for purposes of tax determination.

The Simplified Certificate of Origin is free of charge. You may obtain it from the Uganda Revenue Authority (URA).At some border posts, you may also obtain it from the EASSI Trade Information Desk. URA has granted EASSI permission to perform this service. EASSI is a civil society organization that supports women cross border traders ‘associations.

The Uganda National Bureau of Standards (UNBS) certification involves three key activities –1) purchase of the standard –UGX 20,000 to UGX 50,000 depending on the number of pages in the document 2) quality audit – UGX 250,000 within Kampala and UGX 2 million outside Kampala and 3) annual permit for use of the S-Mark (on products sold in Uganda) or the Q-Mark for exports. The S-Mark annual permit costs UGX 100,000 for companies with 5 or less employees, UGX 250,000 for companies with 5-10 employees and UGX 500,000 for companies with 11 staff or more. Once an enterprise has the S-Mark on any of its products, the S-Mark permit for each additional product costs only UGX 20,000. The Q-Mark annual permit costs UGX 800,000 for companies of all size.

No, if the value of your consignment is under US$ 2,000, you do not need to use the services of a clearing agent. You may go directly to a customs officer for a tax assessment.

At this time, the Uganda National Electronic Single Window is open to use by individuals who a) have a Tax Identification Number and b) trade in consignments whose value exceeds US$ 2,000.

An OSBP is a border facility that combines the two border posts of two countries that share a common border into one single border post, in the same building. An OSBP reduces the time involved in crossing the border and simplifies the border clearance process. Instead of stopping twice at two different border posts, those crossing borders that have OSBPs only need to stop once at the OSBP in the destination country. For example when travelling from Uganda to Kenya through the Busia border crossing you will travel through an OSBP. You will not need to stop at the Busia-Uganda OSBP. Instead, you will proceed straight to the Busia-Kenya OSBP, where you will find representatives from both Kenya’s and Uganda’s trade and border agencies in one building. Exit or entry procedures are completed in the same building, making crossing the border easier and faster.

You may report bribery, goods confiscation or other forms of harassment using the Non-Tariff Barrier Reporting System. Non-Tariff Barriers (NTBs) to trade are measures other than ordinary customs tariffs (taxes on imports) that restrict trade in goods or services in some manner. NTBs can include but are not limited to overly restrictive sanitary, health and environmental protection standards, quotas, price controls, subsidies, export restrictions, customs delays and corruption. The NTBs Reporting System supports the identification and removal of NTBs that affect trade in the region.

When a compliant is reported, it is received by the Ministry of Trade and automatically sent to the responsible trade facilitation agency for resolution. You may access the system by dialing *210# on your phone and following the interactive menu or by visiting the NTB
Reporting website at http://ntbtool.mtic.go.ug/register.php. You may also anonymously report incidents of corruption and harassment through a platform called Sauti by dialing *210*35# (Uganda) and *483*35# (Kenya). Your report will be sent to relevant government authorities when possible and used for evidence-based advocacy by civil society organizations such as EASSI and cross-border traders associations.

Yes, you should always request an itemized invoice and receipt from a clearing agent for clearing your goods.
The receipt will show you the amount paid in taxes as well as the amount paid in clearing fees. If you have a Tax Identification Number, any time URA receives a payment on your behalf, you will receive a text message and / or an email with details on the amount paid and what it was paid for.

You can access information on potential customers and markets in the EAC by contacting the Uganda Export Promotion Board.

Member based business associations like Uganda Women Entrepreneurs Association Ltd. (UWEAL), also maintain active links with similar associations in other countries of the EAC. Buyer and seller opportunities from across the region are advertised through electronic platforms including social media. Visit the UWEAL offices for more information on this.

You need a national passport or EAC passport to travel to Burundi, South Sudan or the United Republic of Tanzania. For travel to Rwanda and Kenya you may use the EAC Inter State Pass (obtained at the Uganda border as you exit Uganda), alongside your Ugandan national identification card or voter’s card. 20. Can I establish a business in another EAC country?

Provided you go through the right legal process and obtain the correct paperwork and permission, you are free to work as a self-employed person in any EAC country or to establish a commercial (business) presence in any EAC country, in line with the host country’s national laws.

The right of residence is offered to citizens of East Africa who live in another EAC country in the categories of workers, self-employed persons and their spouses, children and dependants. If you intend to reside in another EAC country, you will need to apply for and obtain a residence permit.

The application is obtained from and submitted to the immigration authorities in the country where you are seeking residence.