WITH conventional revenue streams shrinking, African continent like their counterparts is now shifting focus towards harnessing digital economy as a veritable avenue to grow its revenue base.
Giving this insight recently was Mr. Muhammad Mamman Nami, Executive Chairman, Federal Inland Revenue Service (FIRS).
“We have seen countries that have introduced new measures to capture the revenue from e-commerce transactions as well as the greater digital economy. Nigeria has introduced a significant economic presence focusing also on automated digital services, while Kenya has also introduced a digital service tax,” he began.
Nami spoke in his capacity as the Chairman of African Tax Forum (ATAF), at the 4th ATAF High-Level Tax Policy Dialogue recently, during a Zoom conference under the theme, ‘Taxing Right for Africa in the New World and Effects of Covid-19: The Role of Tax Policymakers and Tax Administrators.’
“African citizens continue to look up to their governments where economies are stumbling to recover. From a taxation point-of-view, the notion of taxing rights occasioned by the current discussion on the taxation of the digitalised economy continues to be the centre point; pointing towards numerous opportunities,” he said.
As the world enters more complexity in the taxation of highly digitalised businesses, it will be up to policy direction to ensure that African countries do not lose out, he stressed. “To date, throughout the continent, there is a gap between tax policy and tax administration. Through ATAF country programmes, we note that some of our countries may be entering into a global consensus without fully operating its tax policy objectives. That is to say that a country may be in a position that isn’t ready for the changes, rendering their future in tax revenue precarious.”
African e-commerce is also rapidly growing, at an estimated annual rate of 40%. Indeed, the digital economy in Africa is expected to grow to over $300 billion by 2025 (McKinsey, 2013), on the back of massive mobile penetration, among other technologies.