Still racing toward the bottom? Corporate tax incentives in East Africa

In 2012, ActionAid and Tax Justice Network Africa published a report containing estimates of how much revenue East African countries were losing by providing tax incentives. Tax incentives often beneft foreign corporations, as they involve governments reducing or eliminating taxes such as corporate income tax, customs duties or VAT payments, and are ostensibly provided to encourage investment, including foreign investment.

The 2012 report estimated that revenue losses from providing such incentives were massive – up to US$2.8 billion a year for just four East African countries: Tanzania, Kenya, Rwanda and Uganda. Especially large estimated annual losses were documented in Tanzania (US$1.2 billion) and Kenya (US$1.1 billion) but signifcant revenues were also being squandered in Uganda (US$272 million) and Rwanda (US$234 million). These lost revenues could be much better used to fund critical health, education and other public services. The 2012 report received – and continues to receive – widespread attention from the media and governments.

Our 2012 report also documented that many governments in East Africa were pledging to reduce or eliminate tax incentives, which ActionAid and its partners are also advocating them to do. Four years on, this current report asks: What progress has been made since 2012 in reducing tax incentives in East Africa, and have governments kept their promises?

Source: http://www.actionaid.org/sites/files/actionaid/corporate_tax_incentives_in_east_africa_to_print.pdf

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