EAC moves to harmonise alcohol excise duty amid IMF push, eyes end to special tax treatments 

EAC – The East African Community (EAC) has reached a consensus on harmonising excise duty for alcoholic products across partner states, in a move aimed at promoting market integration, reducing tax-related distortions, and curbing illicit trade.  

This initiative is being carried out with the support of the International Monetary Fund (IMF), which is providing technical assistance to the bloc. 

The decision, which follows years of deliberations, is part of the broader tax harmonisation efforts first approved by the EAC Council of Ministers in 2019. However, implementation had remained slow until the recent push.  

The Tax Policy and Tax Administration Sub-Committee, supported by IMF experts, is now progressing with the alignment of excise duties on alcohol, tobacco, non-alcoholic beverages, and fossil fuels. 

According to Frank J. Dafa, Manager of Trade in Goods at the East African Business Council, IMF experts analysed tax data submitted by partner states and proposed minimum excise duty rates for key products.  

For alcohol, the Fiscal Affairs Committee agreed on a minimum duty of US$6 per litre of 100 percent alcohol content, translating to approximately US$0.30 per litre of beer, US$0.72 per litre of wine, and US$2.40 per litre of spirits. 

The rate applies uniformly to both locally produced and imported alcoholic beverages and is designed to uphold principles under the EAC Treaty, the Customs Union Protocol, and World Trade Organization rules. Dafa noted that the uniform rate would ensure neutrality, simplicity, and predictability in alcohol taxation. 

Despite the agreement on alcohol, EAC partner states failed to reach a consensus on harmonising excise duties for tobacco products, non-alcoholic beverages, and fossil fuels. These will remain under review. 

In a parallel effort to enhance tax transparency and equity, the EAC Sectoral Council of Ministers of Trade, Industry, Finance, and Investment (SCTIFI) has instructed the EAC Secretariat to eliminate special tax treatment granted to certain goods within the next 12 months.  

Ministers argued that such treatments lack basis in EAC Customs Law and are undermining intra-regional trade and competition. 

Currently, over 1,950 tariff lines—about 22 percent of the EAC Common External Tariff (CET)—are under stays of application, with projections indicating a potential increase to over 2,000 lines.  

The ministers raised concerns that the misuse of stays and duty remissions is distorting trade and protectionism is being misapplied. 

Going forward, the Council has proposed harmonised duty rates for specific products and a review of production capacity across member states to guide future applications for preferential tax treatment.  

Duty remissions on inputs used in local manufacturing will still be supported to encourage domestic industrial growth. 

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