Abstract
Under Article 79 of the EAC Treaty, the Partner States have under- taken to harmonize and rationalize investment incentives to promote the Community as a single investment area while avoiding double taxation. Article 83 of the same Treaty states that the Partner States have committed themselves to adjust their tax policies to eliminate tax distortions. These provisions show the extent to which the EAC Partner States are willing to advance with tax integration as part of comprehensive regional integration. This approach is welcomed, as scholars generally agree that full regional integration cannot be achieved with- out tax integration. In this sense, tax harmonization is seen as a sure path to tax integration, a driver for effective regional integration. It is unfortunate, however, that tax harmonization in the EAC faces several challenges. Some causes of the challenges are legal, such as differences in legal systems, while others are geopolitically motivated. This paper discusses where the EAC currently stands in relation to tax harmonization. Starting with a theoretical framework, the paper focuses on the current practical aspects of tax harmonization in the EAC. The paper, therefore, highlights the existing discrepancies alongside the challenges in building a harmonized tax system in the EAC. The pa- per identifies three ways out de jure harmonization through traditional law-making by the legislature, de facto harmonization through judicial law-making processes, and tax coordination where tax harmonization does not work.