Africa needs disruptive tax policy to tax digital businesses

Africa needs disruptive tax policy to tax digital businesses


Panelists of the 7th Pan African Conference on tax and Illicit financial flows, stress that Africa needs disruptive tax policies that respond to the positively disruptive digital businesses such as ubber.

“Though digital economy is disruptive and has many benefits, which Africa can’t hide from, the countries in the continent need to redefine their tax policies and practices in order to tax the multinational digital businesses,” says Logan Wort, Executive Secretary of African Tax Administration Forum.

He argues that African countries need to have disruptive tax policies that respond to the disruptive technologies and businesses i order to stop the companies from tax evasion ad tax avoidance.

The multinational digital businesses such as Ubber are also crowding out local companies without paying taxes in some African countries.
Digital multinational businesses operating in the continent are benefiting from the economy but are not paying taxes, according to some reports. Recently Algeria has banned Ubber for failing to have local presence and properly pay tax from the money the company makes in the country.

“There is a lot of value creation coming out of digital economy. Even though its presets challenges because of the traditional tax system we have, It is something we need to embrace,” says Doris Akol, Commissioner General of Uganda Revenue Authority.

By joining Facebook, we created economic value for the company. It is difficult to determine the beneficiary of the value and the creator of the value in the face digital economy, new business model, according to Doris.

“Royalties, license fees and goodwill moving across border, we need to rethink the standards and definitions,” she said this morning at the 7th Pan Africa Conference on tax ad Illicit financial flows in Nairobi, Kenya.

“If you harness the ability of collecting tax from digital economy – the new normal – data is your oil or gold,” she said at the panel, which focused on taxation and intangibles.