The regulation of harmful tax competition in the EAC: current status, challenges, and ways forward

Harmful tax competition is a topic that is globally and hotly discussed. For the past three decades, research on this topic consistently increased. Globally, states have been engaged in different projects aiming at regulating that phenomenon. Because of its international character, most of, if not all, the successful initiatives were undertaken under the auspices of regional organizations. The European Union and the Organization for Economic Cooperation and Development are good examples. This paper studies the current regulation of harmful tax competition in the East African Community. It shows how the EAC has not yet developed a sufficient regulatory approach against harmful tax competition. It also reflects on the challenges thereto related and proposes some actions that EAC needs to undertake to revamp the regulatory situation of harmful tax competition. In consideration of the harmful effects of harmful tax competition, this paper instigates the EAC partner states to stop disregarding harmful tax competition and recommends adopting a Code of Conduct against harmful tax competition in the EAC.