How Can the East African Community Guard Against Base Erosion and Profit Shifting While Working Towards Deeper Integration? Lessons from the European Union

The East African Community (EAC) is working towards establishing deeper integration between its six partner states. The EAC partner states are: Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda. This paper analyses the lessons the European Union may offer the EAC in guarding against base erosion and profit shifting while implementing its integration project. Corporate tax and VAT have been identified as the two tax bases most at risk. This paper analyses the steps taken by the European Union to protect its corporate tax and VAT bases, and draws from the European Union’s proposed Common Consolidated Corporate Tax Base and its VAT harmonization efforts to recommend best practices for the EAC.