East African Community Trade Rules and Procedures A Guide for Women Cross Border Traders Page 1 of 44 Table of Contents ACRONYMS 3 FORWARD 4 SECTION 1: INTRODUCTION 5 SECTION 2: TRADE AND INVESTMENT IN THE EAST AFRICA COMMUNITY 8 SECTION 3: EAC TRADE RULES AND REGULATIONS 10 SECTION 4: REGULATIONS ON FREE MOVEMENT OF PERSONS 33 SECTION 5: REGULATIONS ON MOVEMENT OF WORKERS 35 SECTION 6: KEY SUPPORT SERVICES FOR TRADERS 43 Page 2 of 44 ACRONYMS BMOs Business Membership Organizations CMP Common Market Protocol EAC East Africa Community FDI Foreign Direct Investment DVS Department of Veterinary Services DFR Department of Fisheries GDP Gross Domestic Product MAFC The Ministry of Agriculture, Food Security and Cooperatives MLDF Ministry of Livestock Development and Fisheries NGOs Non-Governmental Organizations KEPHIS Kenya Plant Health Inspectorate Services RoO Rules of Origin (EAC) SPS Sanitary and Phyto-sanitary measures TAEC Tanzania Atomic Energy Commission TFDA Tanzania Food and Drugs Authority TPRI The Tropical Pesticide Research Institute VAT Value Added Tax Page 3 of 44 FORWARD Page 4 of 44 SECTION 1: INTRODUCTION 1.1 About the East African Community (EAC) The East African Community (EAC) is the regional intergovernmental organization of the Republics of Burundi, Kenya, Rwanda, Tanzania and Uganda with headquarters in Arusha, Tanzania. The Treaty for the Establishment of the East African Community was signed on 30th November 1999 and become operational on 7th July 2000. The EAC aims at widening and deepening the cooperation among the Partners States in political, economic and social fields for their mutual benefit. To this extent, the EAC countries established the Customs Union in 2005, Common Market in 2010 and are working to establish a Monetary Union and eventually a Political Federation of East African States. It is notable, that EAC countries have committed to promote gender equality and women’s empowerment. These commitments are contained in various sections of the EAC Treaty and include: Article 5(e)- Objectives of the Community Article 121- The Role of Women in Socio-Economic Development Articled 122- The Role of Women in Business Page 5 of 44 1.2 Scope and Objectives of Guide This guide provides information on key EAC trade rules and procedures, related to trade taking place within the EAC (intra-EAC trade) in a simplified and user-friendly manner. The rules and procedures have been presented in the three key sections namely; 1) rules relating to trade in agricultural produce; 2) rules relating to trade in semi-processed and manufactured goods and 3) rules relating to trade in services. Country specific information on registration of businesses and companies has also been provided in the Appendix Section of this Guide. 1.3 Users of the Guide The main users of this guide are as follows: 1. Primary users will be women cross border traders and associations and networks of women entrepreneurs 2. Secondary users will be male cross border traders, the private sector in general, investors, Business Membership Organizations (BMOs), NonGovernmental Organizations (NGOs), development partners as well as Ministries responsible for Trade, Gender and East African Community Affairs. 1.4 Key Sources of Information Information provided in this Guide was obtained for the following key EAC documents: a) The Treaty for the Establishment of the EAC (2000) b) The EAC Customs Union Protocol and its Annexes (2005) c) The EAC Common Market Protocol and its Annexes (2010) d) The EAC Customs Management Act Page 6 of 44 e) The EAC Trade Report (2012) f) The EAC Facts and Figures (2012) g) The EAC Investment Guide (2013) h) The Manual on Application for EAC Rules of Origin (2006) 1.5 Structure of the Guide This Guide takes the following structure: Section 1: Introduction Section 2: Trade and Investment in the East African Community Section 3: EAC Trade Rules and Regulations Section 4: Regulations on Free Movement of Persons Section 5: Regulations on Movement of Workers Section 6: Key Support Services for Traders APPENDIX Page 7 of 44 SECTION 2: TRADE AND INVESTMENT IN THE EAST AFRICA COMMUNITY Table 1: Key Trade and Development Descriptive Statistics of the East African Community Total surface Area (including water) 1,817.7 thousand square kilometers Total Population 143.5 Million; 68,605,181 Females and 68,605,045 males ( 71,500,000) Total Gross Domestic Product (GDP) US$ 110.3 Billion Average GDP per capita ( individual purchasing power) Total Intra-EAC US$ 769 Trade volumes(Exports and Imports) US$ 5,470 Million Total EAC imports volumes US$ 2,315 Million Total EAC exports volumes US$ 3,155 Million Total Foreign Direct Investment (FDI) US$ 6.3 Billion Total Intra-EAC FDI inflows US$215.4 Million Source: EAC Trade Report (2012), EAC Facts and Figures (2014) Page 8 of 44 Table 2: Top Three (3) Most Traded Goods within the EAC and EAC and the Rest of the World EAC Country Burundi Kenya Rwanda Tanzania Main exports within the EAC Tea, Aluminum waste and crap, soap Beef, pork, meat of sheep or goat, milk products Rare metals ores, tea, tin ores Paper& paperboards, machines having individual functions, mixture of nitrogen, phosphorus fertilizers Tea, raw tobacco and cement Uganda Main imports within EAC Mixture of nitrogen, cement and iron Beef, pork, meat of sheep or goat Main exports to the Rest of the World Unwrought gold, coffee and tea Tea, petroleum oils, cut flowers Cement, animal and vegetable oils, palm oil Medicine mixtures, petroleum oils and electrical appliances for line telephony Rare metal ores, tea, tin ores Petroleum oils, cement and flat iron rods. Unwrought gold, precious metal ores and nuts (incl. cashew nuts, brazil nuts) Coffee, petroleum oils, raw tobacco Source: ITC Trade Map (4-digit cluster) Goods that are commonly traded by small-scale traders ( women and men) in the EAC 1. Cereal and grains 2. Clothes and shoes 3. African jewellery and clothes 4. Cigarettes 5. Metal spare parts 6. Mobile phones Source: African Trade Policy Centre-UNECA (2009) Page 9 of 44 SECTION 3: EAC REGULATIONS TRADE RULES AND 3.1 Introduction In the EAC, there are different rules and procedures when trading in; a. Unprocessed agricultural produce; b. Manufactured and goods and; c. Services. This section outlines these rules, regulation and procedures in each category. 3.2 Trading in Unprocessed Agricultural Produce This section will cover trade in agricultural produce. This includes trade in live animals, plants, seeds, fruits (other than those packed), cereals (other than those packed), fish and poultry. Q: What rules apply when trading in agricultural produce? The main rules that apply are: 1. The EAC Rules of Origin which are described in detail in paragraph 3.3.1 below. A trader will need to show evidence that his/her agricultural produce is entirely produced or obtained in one of the EAC countries. Page 10 of 44 2. Additional certificates are required in order to ensure food, animal and human health and safety. This is commonly referred to as Sanitary and Phyto-Sanitary measures (SPS measures). A trader is required to obtain an import license from the appointed government agency before being able to import the agricultural produce into another EAC country. Table 3: Main government agencies involved in ensuring food, animal and human health and safety EAC Country Main Government Agencies Burundi Plant Protection Department under the Ministry responsible for Agriculture, Livestock and Fisheries. Kenya a. The Kenya Plant Health Inspectorate Service (KEPHIS), under the Ministry in charge of Agriculture ( for import licensing of seeds and plants) b. Kenya Bureau of Standards (KEBS) c. The Department of Fisheries (DFR), in the Ministry in charge of Fisheries Development; d. The Department of Veterinary Services (DVS), under the Ministry in charge of Livestock Development and; Rwanda Tanzania e. The Department of Food Safety and Quality, under the Ministry in charge of Public Health ( for import licensing for food stuffs) Ministry of Agriculture and Animal Resources. a. Tanzania Food and Drugs Authority (TFDA). All importers of food to Tanzania must be registered with this agency. b. Tanzania Atomic Energy Commission (TAEC)- All imported food into Tanzania must be inspected for radiation by this agency. Page 11 of 44 c. The Fisheries Department of the Ministry of Livestock Development and Fisheries d. The Ministry of Agriculture, Food Security and Cooperatives (MAFC) and its departments e. The Tropical Pesticide Research Institute (TPRI) which issues import permits for plant and plant products The Directorate of Veterinary Services (DVS) of the Ministry of Livestock Development and Fisheries (MLDF) which is responsible for animal health matters. a. The Ministry of Health which is responsible for issues related to drugs and food safety. f. Uganda b. The Ministry of Agriculture, Animal Industry, and Fisheries (MAAIF) and its various directorates that is animal, crop and fisheries resources. Example 1: Pendo is a Tanzanian business woman who owns 6 acres of farming land in Tanzania in which she grows maize commercially. She has just got a bumper harvest and now wants to export and sell some of her maize in Kenya. Before she can sell her maize in Kenya, she will need to get an import licence from the Kenya Plant Health Inspectorate Service (KEPHIS), under the Ministry in charge of Agriculture. This government agency has satellite offices at most border posts/exit points. Q: Is agricultural produce charged internal taxes such as Value Added Tax (VAT) and/or Excise Taxes? In most EAC partner states countries, unprocessed/raw agricultural products are NOT charged Value Added Tax (VAT) or Excise Tax. However, it is advisable that a trader obtains up-to-date information on internal taxes Page 12 of 44 from the Revenue Authority offices (at border posts or national or regional offices) of the country where the goods will be sold. Note: A country may prohibit the import of some products in order to protect animal, plants and human health. For example, Uganda has banned importation of beef (due to mad cow disease); dressed chicken and poultry (due to bird flu); soil; banana leaves; rice straw; wheat straw; leaf; leaf mold; and chaff. Tanzania also prohibits imports of poultry and poultry products due to bird flu. Therefore, if you are planning to export your goods to an EAC country, make sure to find out through the relevant government agency of the country you wish to export to, the current list of the banned goods in that country. Page 13 of 44 3.3 Trading in manufactured and/or semi-processed goods within the EAC region The main regulations and procedures relating to trading in manufactured and semiprocessed goods within the EAC region are as follows; 1. The EAC Rules of Origin, 2. Product Quality Standards and, 3. Domestic/internal taxes 3.3.1 What are the EAC Rules of Origin? The EAC Rules of Origin (RoO) is a set of rules that are used to differentiate between goods that are produced within the EAC region and those that are not. Generally, goods produced or obtained within the EAC region will not be charged any import duty or tariffs; in other words zero tariff/duties will be charged on the goods. 3.3.1.1 EAC Rules for goods valued at US$ 2,000 and above As mentioned above, goods must come from or be produced from one of the EAC’s countries so as to qualify for zero tariff/duty treatment under the EAC Rules of Origin. The criteria used, is on how the goods have actually been produced. If you are a trader (of manufactured goods valued at US$ 2,000 and above) and wish to benefit from a zero tariff/duties on your goods, you must comply with AT LEAST ONE of the four rules below. Page 14 of 44 What are the 4 Rules of Origin for Goods Above US$ 2,000? Rule 1: Wholly produced Rule; the goods must be completely produced OR got from one of the EAC countries. In other words, no materials from outside the EAC have been used. These goods include: animal, products obtained mineral products, vegetable products, live from live animals, products obtained by hunting or fishing conducted within the EAC; products obtained from the sea and from rivers and lakes, products manufactured in a factory, used articles and scrap and waste resulting from manufacturing operations. Rule 2: Material content Rule1: the value of any foreign (that is, non-EAC) materials used to produce the good does not exceed 60% of the total cost of all materials used in the production of the goods. Rule 3: Value addition Rule: At least 35% value has been added to the goods from the process of production of the goods. This means that some form of processing has taken place. For example, fruits have been transformed into packed fruit juices. 1 The EAC Rules Origin for Goods Valued over US$ 2000 will soon change for Rule 2 and 3. However, these Rules have not yet been made official and therefore the current Rules continue to apply. In the new rules the price of goods (Ex-work price ie price after processing/manufacturing + profit margin) will be used to calculate the Rules 2 and 3. Further, the 60% (Rule 2) and 35% (Rule 3) requirements will be abolished and a Schedule with different percentages depending on the goods will be used to calculate. Page 15 of 44 Rule 4: Change of Tariff Heading Rule: goods produced are classified or become classified under a different tariff heading other than the tariff heading under which they were imported. For example, an uncut tanzanite ( Kisii soapstone) is subsequently cut and polished using an industrial process. The classification of the uncut tanzanite (kisii soapstone) will be different from the cut and polished tanzanite (Kisii soapstone) as substantial transformation or change from the original state (through an industrial process) of the uncut tanzanite (Kisii soapstone) has taken place. Q: How does a trader calculate the requirements of Rule 2, 3 and 4 of the Rules of Origin? It is advisable that you visit your local chamber of commerce or government revenue authority to seek assistance in calculating this requirements as it can be technical. However, a trader must ensure to record all information from the first step of production or processing of the goods/products. Page 16 of 44 3.3.1.2 EAC Rules of Origin for goods valued at below US$ 2,000 To facilitate small-scale traders who trade in goods not above a value of US$ 2,000, an EAC Simplified Certificate of Origin is used. The general rule is that the goods can either be produced or manufactured in one of the EAC countries. Example 2: Asimwe is a Ugandan business lady who wants to travel to Kenya to sell her Ugandan made Kitenge clothes worth US$ 1,000. On entry into Kenya, she will require a Simplified Certificate of Origin in order for her clothes not to be charged any duties or tariffs. The following are the steps she will follow to obtain the Simplified Certificate of Origin. Step 1: Complete the EAC Simplified Certificate of Origin and attach an invoice (or evidence of value) of the goods and present these documents to the designated customs official at Uganda’s point of exit at the border for confirmation. Step 2: The customs official should confirm that the goods qualify for the simplified procedures. If satisfied, the customs official should stamp and sign the Simplified Certificate of Origin. Step 3: Asimwe should then present the signed and stamped Simplified Certificate of Origin to Kenya’s customs officials on the other side. Page 17 of 44 Step 4: The custom officials on the Kenyan side ( importing country) will check that the goods declared by the trader on the simplified Certificate of origin is in the reference to the common list of approved products. Step 4: The custom official will then confirm the signature and stamp appearing on the certificate are the same as those notified by the Customs Authority of Uganda. Step 5: If everything is in order, the goods will NOT be charged any duties or tariffs in Kenya ( importing country). Note: The signed Simplified Certificate of Origin will ensure that NO tariff or duties are charged in the importing Partner State. Where the trader makes a false declaration of value of goods OR splits the goods in order to qualify for a simplified certificate origin he/she will have committed an offence as provided in the EAC Customs Management Law. A trader can get a Simplified Certificate of Origin from their National Chambers of Commerce, Revenue Authority or from Custom Officials at Border points. Sample Simplified Certificate of Origin ( to be included in printed version) Page 18 of 44 3.3.2 Product Quality Standards In order to protect consumers’ health and protect them from sub-standard and harmful products, manufactured products are required to meet certain minimum quality standards. Q: How does a trader ensure that his/her products meet the required quality standards? Generally, a trader will need to obtain an Import Clearance Certificate or Certificate of Conformity of product standards before he/she is allowed to sell a product in another EAC country. This Certificate is given by the appointed government agency responsible for ensuring product quality standards in two situations: Situation 1: When the Government Standards Agency in the importing country recognize or accepts the ‘mark of quality’ from the country of origin of the trader; OR Situation 2: A sample of the product (s) is laboratory tested and found to meet the required minimum standards. Page 19 of 44 Some product quality standards are the same across the region. However, EAC countries could have different regulations and procedures on some issues. These different regulations are mostly on: Inspection and laboratory testing at border of imported food stuffs and products; Product marking, labeling and packaging requirements; Banned products list due to danger to human beings. The following table provides more information on these regulations. Table 4: Key Regulations on Product Quality Standards in each EAC Country EAC Partner State Country Kenya Key Government Agency Key Regulations Responsible for Product Quality Standards Kenya Bureau of KEBS conducts testing and inspection at border Standards (KEBS). of imported food products such as sugar, cereals and pulses, fertilizer, animal, fishery, and dairy products. This approach is commonly referred to as Route A. For non-food products, a trader can use two approaches to ensure his/her products are certified/confirmed to meet the required minimum standards; a. Route B (Fast track Lane)- in which the trader must register for one year, and pay a specified fee. In this case the registered products of trader are exempt from Page 20 of 44 EAC Partner Key Government Agency Key Regulations State Responsible for Product Country Quality Standards mandatory testing, but KEBS can still conduct random testing ; OR b. Route Cthis is open to manufacturers/trader who can demonstrate the existence of a quality management system in their manufacturing/production process at their factories. A 1(one) year license is given to manufacturers/trader, after a successful inspection of their production processes. Tanzania Tanzania Bureau Standards (TBS) Additionally, all products sold/traded in Kenya should be labelled with measurements and packaged. All foodstuffs must also be labelled in English or Kiswahili and the manufacturer must indicate on the labels the date of manufacture and expiry. Banana leaves, maize, rice, sorghum or wheat straw, and bags containing or having contained malt, soil or leaf mould must not be used as packing material. of In April 2012 TBS allowed small scale traders to use the destination inspection system. This means that products transported by small-scale traders will be tested for product quality standards at the point of entry into Tanzania. The requirements for marking, labelling, and packaging apply to three broad categories of food namely: 1) food, 2) non-food, and 3) dangerous goods. Sensitive products such as food, pharmaceuticals and dangerous goods (e.g. explosives and flammable liquids) must be well packaged, labelled and marked. Marking/labelling information requirements include: name of the product, date of manufacture and expiry, contents or ingredients, directions for use, storage conditions, warning/safety information and symbols, lot Page 21 of 44 EAC Partner Key Government Agency Key Regulations State Responsible for Product Country Quality Standards identification, country of origin, and name and address of the manufacturer. Uganda Rwanda Uganda National Bureau of Standards (UNBS) Only imports covered by mandatory standards are inspected at entry points/ border points. Where necessary, the UNBS draws samples of the product for laboratory testing. If the product does not meet the critical minimum requirements for health, safety, and performance the product is prohibited entry on those grounds. Surprise inspection visits are also conducted and products are sampled from a seller’s place of business for laboratory testing. Additionally, the following information must be clearly marked on imports; importer/exporter name, consignee, flight/vehicles details, place of discharge, number of packages, container identity, description of goods, airway bill number/bill of lading, and country of origin/destination. There are additional labeling requirement for clothing and this information can be obtained from UNBS. Imports of selected products and materials of high risk to humans and the environment require a batch certificate from the RBS, confirming that a particular product is in line with Rwanda standards, or international or foreign standard recognized by the RBS. Rwanda Bureau Standards (RBS) of All imported foodstuffs must indicate the date of manufacture and expiry. Importers must apply for the batch certificate one week before the goods arrive. If the imports include food or food products, the test certificate must indicate that the food or food products are consumed in the country they are coming from. Page 22 of 44 EAC Partner Key Government Agency Key Regulations State Responsible for Product Country Quality Standards RBS officials usually take samples from imported goods and test the sample to ensure they meet the required standards. The RBS official will then issue a batch certificate for imports that comply with requirements. Burundi The Burundi Bureau of Standards and Quality Control (BBN) Additionally, goods and containers of goods must be labelled and marked clearly to facilitate identification of the articles indicated on the accompanying documents/forms. Labels must give the name of the product, ingredients, net weight, name and address of the manufacturer, packer, distributor, importer, exporter or vendor, lot identification, date marking and storage instructions, and instructions for use. All mandatory information must be in one of the three official languages (English, French, or Kinyarwanda). Also worth noting is that Rwanda prohibits the importation of plastic bags. Products already inspected and certified by the countries of origin may also undergo additional inspection and testing upon arrival in Burundi. The BBN may refuse to allow certain products to enter Burundi if they have been rejected in other EAC countries. Burundi does not have any national provisions on marking, labelling and packaging. BBN uses international standards on labelling for food stuffs. Source: Agency websites and WTO Trade Policy Review Reports (2012) Page 23 of 44 Chart 1: Summary of procedure of confirming manufactured and semiprocessed goods meet the required quality standards Step 1 Step 2 Step 3 Step 4 Step 5 •The trader should show evidence that his/her goods meet the required minimum standards and that they are properly labelled and packaged to the Bureau of Standards official in the country where the goods will be sold. •If the goods have the 'mark of quality' from the traders home country, the trader should show this mark and the clearing official should recognise the mark and allow the goods to enter the country. •Note:The clearing official has the right to reject the mark of quality if he/she is suspects (or has evidence) the mark is fake OR was obtained corruptly. •If the goods do not have the mark of quality ( or the mark is suspected to be fake) the clearing official has the right to get a sample of the goods for laboratory testing. •The goods will then be taken for testing in a government laboratory. Testing might take a few days as most EAC countries do have fully equipped laboratories at border posts. •If goods are tested and found to meet minimum standards OR if the goods 'mark of quality' is accpeted by the clearing official, the trader will be given an Import Clearance Certificate ( also know as Certificate of Conformity )which will allow the trader to sell his/her goods. Page 24 of 44 Note: At the EAC /regional level over 1,200 standards have been harmonized that will be used by all EAC countries. The standards can be viewed on; file:///C:/Users/Admin/Downloads/eac-catalogue.pdf. From 2006, EAC countries are required to recognize or accept each others ‘marks of quality’. This means that a trader whose products have obtained a ‘mark of quality’ from his/her home country’s Bureau of Standard, should import those products to another EAC country without the products been tested again for quality standards in that other country. Some products have been banned from been imported or sold in EAC countries. For example in Kenya, a full information on banned goods can be found on; http://www.kebs.org/index.php?opt=qai&view=banned#. Products that do not meet the required minimum standards are either destroyed or re-exported with supervision of the government agency in charge of ensuring standards. 3.3.3 Internal Taxes The major internal taxes affecting goods (manufactured and semi-processed) is Value Added Tax (VAT) and Excise Tax. The following table shows the applicable rate of VAT and excise rates for manufactured/semi-processed goods coming from outside the country, by each EAC country. Usually a trader will be required to pay these taxes before his/her goods are cleared for sale or circulation in the importing country. Page 25 of 44 Table 5: Rate of VAT and Excise Tax across the East African Community EAC Partner State Country Kenya VAT Rate Excise Tax 16% This is also applied on goods coming from outside the country. Visit the Kenya Revenue Authority (KRA) for full list of excise rates applied to different products. Uganda 18% This is also applied on goods coming from outside the country. Visit the Uganda Revenue Authority (URA) for full list of excise rates applied to different products. Tanzania 18% This is also applied on goods coming from outside the country. Visit the Tanzania Revenue Authority (TRA) to get the full list of rates applied to different products. Rwanda 18% This is also applied on goods coming from outside the country. Visit the Rwanda Revenue Authority (RRA) for full list of excise rates applied to different products. Burundi 18% This is also applied on goods coming from outside the country. Visit the Burundi Revenue Authority (BRA) for full list of excise rates applied to different products. Page 26 of 44 Example 3: How does a trader avoid double taxation? To avoid paying internal taxes twice (i.e paying taxes in the home country and in the country where the goods will be sold) a trader should ensure that when buying goods (especially if buying in wholesale or from the factory) he/she should indicate to the seller that the goods are for export purposes and not for local consumption2. The seller will, therefore, not include internal tax on the selling price of goods. However, the trader will be obligated to pay internal taxes in the county where the goods will be sold. Example 4: Raha, a Tanzanian business lady, wants to buy 50 (wholly produced) kitenges from Burundi’s X and Y company and then sell them in Kenya. The selling price is Tshs 15,000 per Kitenge. If VAT (at the rate of 18& in Tanzania) is included in the total selling price per Kitenge, this will amount to Tshs 885,000 [750,000+ (18/100*750,000)]. To avoid double taxation, Raha should advise the business/export officer at X and Y company that the goods are for export and therefore VAT should not be included on the selling price (invoice). However, when Raha reaches the border of Tanzania and Kenya, she is required to pay 16% VAT to Kenya’s customs authority before her kitenges are allowed to enter Kenya for sale. 2 VAT is a consumption tax therefore exports should not be charged VAT. Read more: http://www.mof.go.tz/mofdocs/revenue/revvat.htm AND http://www.tra.go.tz/index.php/export-procedures OR http://www.revenue.go.ke/index.php/domestic-taxes/vat/about-vat/how-vat-works Page 27 of 44 Chart 2: Summary of Process of Clearing Manufactured and Semi-Processed Goods at the Border for Small-Scale Traders Step 1 Step 3 • Obtain an Import Clearance Certificate (Certificate of Conformity) for Products Quality Standarsd from the country where the goodds will be sold • Obtain a signed and stamped Simplified Certficate of Origin from the country where the goods will be sold • Pay VAT and/or Excise Tax in the country where the goods will be sold Step 4 Page 28 of 44 Table 6: Checklist of Required Documents for Selling in another EAC Country Trade Trading in agricultural produce Required Documents Genuine Sales Invoice/Receipt or evidence showing value/cost of produce Signed and Stamped Simplified Certificate of Origin Signed and Stamped Import License ( for sanitary regulations) Trading in semiprocessed or manufactured products Genuine Sales Invoice/Receipt or evidence showing value/cost of products Signed and Stamped Simplified Certificate of Origin Signed and Stamped Import Clearance Certificate (for quality products standards Page 29 of 44 3.4 Trading in Services The main rules and procedures relating to trade in services are mainly found in the EAC Common Market Protocol (CMP). The key rules are those related to the free movement of temporary service suppliers. Examples of services suppliers include: independent consultants, business sales persons and IT maintenance persons. The EAC Common Market Protocol provides for free movement of temporary services suppliers under Article 16.6. “Services suppliers” are different from “workers/or employees” in terms of the regularity, periodicity and continuity of the services they supply. The key features of temporary service suppliers are; The services to be provided are on temporary basis. The service suppliers is paid in their home country and it is not necessary for the service supplier to live (even temporarily) in the host country. The services supplier has no access to the host country domestic market as would a worker, and does not benefit from rights that workers have such as spousal and dependents entitlements or rights to social security benefits. Page 30 of 44 Table 7: Differences between temporary services suppliers and workers Issue Free Movement of Workers Regulations Freedom to Provide Services Schedule Basic right Right of an individual to apply for and accept employment Right of a service provider (business) to provide services Basis of movement Permanent Temporary Length of stay Long-term Short-term Access to labour market Yes No Right to remain Yes No, unless period reaches [five] years Access to social security benefits Yes No Where employee paid Country where worker moves to Country where employed by service provider Spouse and dependants Yes No Page 31 of 44 Q: What are the specific rules relating to temporary service suppliers? Despite the differences between temporary service suppliers and workers, there are currently no separate rules in the EAC. The regulations on movement of workers also apply to movement of temporary service suppliers. The regulations on movement of workers are discussed in paragraph 5.0 below. New dawn for temporary service suppliers! After much deliberation and negotiations, EAC Partner States have committed to develop a separate set of regulations for temporary services suppliers. Negotiations are expected to commence in November 2014 and should lead to new and less strict regulations governing movement of temporary service suppliers. Page 32 of 44 SECTION 4: REGULATIONS MOVEMENT OF PERSONS ON FREE Free movement of persons (human beings) is provided for under Article 7 of EAC Common Market Protocol. Movement of traders/business people (except services suppliers OR those wishing to move to3 and stay) falls under this section. A citizen of an EAC country can enter and remain in another EAC country without a visa for purposes of visiting, seeking medical treatment, transiting, undertaking studies or any other lawful purpose for a period of up to 6 months with a possibility of renewal. The immigration officer has the right to give one a period between one (1) day to six (6) months. It is important to note, that a person entering an EAC country for purposes of employment or work is NOT covered under this provision and therefore different requirements apply which are discussed under Section 5. In order to benefit from this right, a citizen of an EAC Partner State Country must have; a valid travel document, i.e. passport or temporary pass document comply with immigration procedures e.g. filling in the required immigration forms, and getting the right medical vaccinations such as yellow fever vaccination. Tanzania for example requires that persons 3 Read more on Right of Establishment in the EAC for those wishing to move to and stay in an EAC Country, file:///C:/Users/Admin/Downloads/Annex%20on%20the%20Right%20of%20Establishment%20(1).pdf Page 33 of 44 entering Tanzania must be vaccinated against yellow fever. It is important to note that no payment or fee is required for immigration forms or the six months stamp. Q: Does a trader require a travel document to enter another EAC partner state country? Yes. A trader will need a valid travel document usually a passport or temporary pass. Kenya, Uganda and Rwanda recognize National Identity Cards as valid travel documents. Q: Can a trader live and establish a business in another EAC partner state country? Yes. However, the trader will need to apply for a residence permit. He/she will also need to register the business in accordance with the regulations of that country. Page 34 of 44 SECTION 5: REGULATIONS ON MOVEMENT OF WORKERS Article 10 of the Common Market Protocol provides that citizens of EAC countries have a right to seek and take-up employment in another EAC country. Workers also have right to social security, rights for their dependents (i.e. spouse and children), the freedom of association and collective bargaining, as well as opportunity for dispute settlement. Q: Is one required to have a permit to work in an EAC country? Yes. In order to work in another EAC country, a worker is required to have a valid work permit. For one to apply for a work permit, the person is required to have; A valid passport; A contract of employment and; Any other document(s) that the authorities may require. All work permit application must be made within 15 days of entering into the host (other) country, or within 15 days from the date of concluding the contract in the case where the worker is already in the host (other) country. The worker and his/her dependents will also be given a pass to remain in the host county for a period of 6 months pending the processing of the work permit. Page 35 of 44 In cases where employment does not exceed more than 90 working days, workers can apply for a special pass which can be issued at the point of entry into the host country upon presentation of a contract and a valid travel document. Q: Is one required to pay fee in order to obtain a work permit? The EAC Common Market Protocol directs that EAC countries to harmonize work permit fees. However, this has not been implemented to date and EAC countries apply different work permit fees. Kenya and Rwanda have waived work permit fees for citizens of EAC partner countries. Uganda has also waived work permit fees for Kenyan and Rwandan citizens. However, Tanzanian and Burundi still treat all citizens of the EAC countries as non-EAC citizens with respect to work permit fees. This means one must pay a fee in order to obtain a work permit. Q: What is the procedure to be followed when a worker stops working? In the event where a worker stops working, he/she is obliged to inform the competent authority in writing within 15 days. If he/ she wishes to change employment, the worker is also obliged to notify authorities in writing within 15 days of ending his/ her employment and must apply for a new work permit. Page 36 of 44 Q: What happens if a work permit application is rejected? In the event that a work permit application has been rejected by the authorities, the worker will be informed by the authorities in writing specifying the grounds for the reject. Further, when a work permit is denied, the authority should give reasonable time for applicant and his/her dependents reasonable time to leave the country. Q: Can a work permit be cancelled? Yes. A work permit can be canceled if a worker/ employee is removed, stops to be engaged in employment for which the permit was issued or if the permit was acquired fraudulently. Where the work permit has been canceled, the worker should either leave the country or regularize his or her status within 30 days. If the worker does not comply with the 30day deadline, the host country may remove him/ her back to her country. The following table summarizes the requirements and procedures for obtaining work permits in the five partner states. Page 37 of 44 Table 8: Requirements and procedures for issuing work permits in the EAC General Conditions Applicable to all EAC Countries Condition KENYA UGANDA TANZANIA RWANDA BURUNDI Completion of Applicable application forms Applicable Applicable Applicable Applicable Permit application letter should be addressed to the Director General of Immigration Letter of application for work permit should be addressed to Inspector General of Labour Attachment of Applicable Passport Size 2 photos Photographs Applicable Applicable Applicable Applicable 2 photos 6 photos 1 photo 2 photos Copy of the Applicable National Passport Applicable Applicable. Applicable. The Passport should be valid for not less than 6 months Applicable Attachment of Applicable Introduction Letter OR Introductio Curriculum Vitae n letter Applicable Applicable Applicable Applicable Introduction letter Introduction letter Curriculum Vitae Curriculum Vitae Attachment Copies Academic Certificates Applicable Applicable Applicable Applicable of Applicable of Preferable certified copies Attachment of Applicable Evidence of Payment of Processing Fees N/a N/a Employment Contract Applicable Applicable Applicable Applicable Applicable Security Bonds N/a Applicable Applicable N/a N/a Page 38 of 44 N/a N/a General Conditions Applicable to all EAC Countries Condition KENYA UGANDA TANZANIA RWANDA BURUNDI Recommendation N/a Letter (employer) from the Institution attached to in host country N/a N/a Applicable N/a Letter of Conduct Applicable N/a Applicable in N/a the form of Police clearance (original) from the country where you have lived for the last 6 months Good N/a Page 39 of 44 Table 9: Work Permits Fees in Tanzania Class Sector Fees for 2 years (US $) A-1 Prospecting and Mining 3,000 A-2 Large Scale Farming 3,000 A-3 Prescribed Profession and consultancy Services 3,000 A-4 Large scale Manufacturing and Processing 2,500 A-5 Large scale agriculture and husbandry 2,000 A-6 Artisans 2,000 A-7 Small scale farming trade, business and fishing 1,000 A-8 Peasants 6 B-1 Specific Employment by Specific Employer 2,000 C-1 Researchers and employees of Organizations(NGO) duly registered C-2 Retired Persons 500 C-3 Approved Religious Activities 200 C-4 Winding up affairs of Contract and Sick Persons 200 non- Governmental 500 Note: Those seeking to work in Zanzibar must make double payments. This is because the worker must obtain a work permit for both United Republic of Tanzania and Zanzibar. Page 40 of 44 Table 10: Work Permits Fees in Burundi Class 1 Sector Professionals Duration 2 years Fees 3% of gross annual salary 2 Investors or their representatives 3 Foreigners born and living Permanent FREE in Permanent FREE Burundi 4 Staying for more than 20 years 5 years FREE 5 A spouse of a Burundian Permanent FREE 6 Refugees 5 years FREE Table 11: Work Permit Fees in Uganda CATEGORY OF WORK PERMIT FEES IN US $ Category 1: 6 months work permit a) Class B (agriculture) b) Class C (Mining) c) Class E (Manufacturing) d) Class F (Professional) e) Class G (Expatriate Employment Category 2: 12 months work permit a) Class B (agriculture) b) Class C (Mining) c) Class D (Business persons) d) Class E (Manufacturing) e) Class F (Professional) f) Class G (Expatriate Employment Category 3: 24 months work permits a) Class B (agriculture) b) Class C (Mining) c) Class E (Manufacturing) d) Class F (Professional) e) Class G (Expatriate Employment Category 4: 36 months work permits a) Class B (agriculture) b) Class C (Mining) c) Class E (Manufacturing) Page 41 of 44 800 800 800 800 800 2,500 2,500 2,500 2,500 2,500 2,500 4,000 4,000 4,000 4,000 4,000 5,000 5,000 5,000 d) Class F (Professional) e) Class G (Expatriate Employment 5,000 5,000 Table 12: Checklist of Required Documents for Business Persons, Workers and Temporary Service Suppliers Category Business Persons/Trader Required Documents Valid travel document i.e National Identification Card( for some cases), passport or temporary pass Some evidence of intended trading activity i.e invoice, Certificate of Origin or Purchase Order Signed and Stamped Immigration Stamp Workers Valid travel document i.e National Identification Card ( for some cases), passport or temporary pass Work permit OR special pass( pending the processing of work permit) Signed and Stamped Immigration Stamp Temporary service suppliers Valid travel document i.e National Identification Card (for some Countries), passport or temporary pass Work permit OR special pass( pending the processing of work permit) Signed and Stamped Immigration Stamp Page 42 of 44 SECTION 6: KEY SUPPORT SERVICES FOR TRADERS Goods clearing, customs and immigration services are most in use by traders. However, traders should also endeavor to obtain additional support services that can help secure and grow their businesses. These services include; 1. National social security; all EAC partner states countries have rolled out national social security funds. These funds are important as they help an individual save for retirement or when unable to conduct normal daily activities due to illness or accidents. Traders who are self-employed can apply to be members of the funds and after been accepted to the fund, pay a monthly contribution. Table 12: Fee payable by self-employed persons in EAC Partner States Country Contribution currency) Kenya Kshs 2004 Uganda TBC Tanzania Rwanda Minimum contribution is Tshs 20,000 but one can contribute more depending on earnings. 6% of the declared fixed salary Burundi TBC 4 per This might soon change to a minimum contribution of Kshs 150 Page 43 of 44 month( local 2. Insurance services – an insurance cover is important in order to secure the trader’s goods and business. Most insurance companies in the region have developed innovative and affordable insurance covers that be accessed by small-scale traders. 3. Legal services- it is important to retain the services of a lawyer to assist, especially, in drafting and interpretation of legal contracts and documents. This will ensure that the trader does not loss his/her property, does not breach legal commitments or become liable under contracts. These services can be obtained from National Chambers of Commerce usually at a small fee. 4. National hospital Funds- all partner states have put in place in national health insurance funds and it is important for trader to join such funds in order to receive financial support from the government for health services. Huge medical bills can lead to the collapse of business, if the business person is solely depending on his/her business to pay for medical bills. 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