WHAT
YOU NEED TO KNOW
INTRODUCTION:
Article 16 of the Common Market Protocol provides that the Partner States shall
guarantee the Free Movement of Services supplied by nationals of Partner States
and the free movement of service suppliers who are nationals of the Partner
States within the Community.
FREE
MOVEMENT OF SERVICES SHALL COVER THE SUPPLY OF SERVICES:
a) From the territory of a Partner
State into the territory of another Partner State;
b) In the territory of a Partner State
to provide a service to consumers in another Partner State(s);
c) By a service supplier of a Partner
State, through commercial presence of the service supplier in the territory of
another Partner State; and
d) By the presence f a service
supplier, who is a citizen of a Partner State, in the territory of another
Partner State.
WHAT
IS A SERVICE?
For
the purpose of the East African Common Market, “services” includes:
a) Services in any sector except
services supplied in the exercise of governmental authority which are not
provided on a commercial basis or in competition with one or more service
suppliers;
b) Services normally provided for the
remuneration, as far as they are not governed by the provisions relating to
free movement of goods, capital and persons.
WHAT
ARE THE GENERAL EXCEPTIONS FOR TRADING IN A SERVICE?
A
Partner State may restrict trade in Services by nationals of other Partner
States to protect measures:
i.
Necessary
to protect public morals or to maintain public order;
ii.
Necessary
to protect human, animal or plant life or health;
iii.
Necessary
to secure compliance with laws or regulations which are not inconsistent with
the provisions of the Common Market Protocol including those relating to:
a. The prevention of deceptive and
fraudulent practices or which deal with the effects of a default on services
contracts;
b. The protection of the privacy of
individuals in relation to the processing and dissemination of personal data
and the protection of confidentiality of individual records and accounts; and
c. Safety.
iv.
Inconsistent
with Article 17 of the Common Market Protocol, provided that the difference in
treatment is aimed at ensuring the equitable or effective imposition or
collection of direct taxes in respect of services or service suppliers of other
Partner States; or
v.
Inconsistent
with Article 18 of the Common Market Protocol, provided that the difference in
treatment is the result of an agreement on the avoidance of double taxation or
provisions on the avoidance of double taxation in any other international
agreement or arrangement by which the Partner State is bound.
HOW
SHALL PARTNER STATES ENSURE THAT THERE IS EQUITABLE OR EFFECTIVE IMPOSITION OR
COLLECTION OF DIRECT TAXES?
The
Common Market Protocol provides measures that are aimed at ensuring the
equitable or effective imposition or collection of direct taxes and they
include measures taken by a Partner State under its taxation system, whish
shall:
a) Apply to non – resident service
suppliers in recognition of the fact that the tax obligation of non – residents
is determined with respect to taxable items sourced or located in the territory
of the Partner States;
b) Apply to non – residents in order to
ensure the imposition or collection of taxes in the territory of the Partner
States;
c) Apply to non –residents or residents
in order to prevent the avoidance or evasion of taxes, including compliance
measures;
d) Apply to consumers of services
supplied in or from the territory of another Partner State in order to ensure
the imposition or collection of taxes on such consumers derived from sources in
the territory of the Partner States;
e) Distinguish service suppliers
subject to tax on worldwide taxable items from other service suppliers, in
recognition of the difference in the nature of the tax base between them; or
f) Determine, allocate or apportion
income, profit, gain, loss, deduction or credit of resident citizens, companies
or firms or the branches of the companies or firms or their branches, in order
to safeguard the tax base of the Partner State.
WHAT
SECURITY EXCEPTIONS EXIST ON TRADE IN SERVICES?
Article
22 of the Common Market Protocol provides that none of the following aspects
shall be construed:
i.
To
require any Partner State to furnish any information, the disclosure of which
it considers contrary to its essential security interests;
ii.
To
prevent any Partner State from taking any action which it considers necessary
for the protection of its essential security interests:
a. Relating to the supply of services
carried out directly or indirectly for the purpose of the provisioning a
military establishment;
b. Relating to fissionable and
fusionable materials or the materials from which they are derived;
c. Taken in time of war or other
emergency in international relations; or
iii.
To
prevent any Partner State from taking any action in pursuance of its
obligations under the United Nations Charter for the Maintenance of
International Peace and Security.
iv.
The
Partner States shall, to the fullest extent possible, inform the Council of
measures taken under sub-paragraphs (b) and (c) of paragraph 1 and of their
termination.
HOW
IS THE IMPLEMENTATION OF THE FREE MOVEMENT OF SERVICES DONE UNDER THE COMMON
MARKET PROTOCOL?
Article
23 of the Common Market Protocol provides that implementation of Free Movement
of Services (Article 16 of the Protocol) shall be progressive and in accordance
with the Schedule on the Progressive Liberalization of Services, specified in
Annex V to the Protocol.
The
Partner States, undertake to make additional commitments on the elimination of
restrictions on the service sectors and sub- sectors that are not specified in
Annex V of the Protocol and the Council shall issue directives on the
modalities for implementation.
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