ATAF Launches VAT Digital Toolkit for Africa to Secure VAT in the Digital Economy
The launch of the ATAF VAT Digital Toolkit for Africa marks a significant step towards addressing these challenges and securing crucial VAT revenues in the digital age.
CAPE TOWN, South Africa - The African Tax Administration Forum (ATAF) launched the VAT Digital Toolkit for Africa on Wednesday, November 1, 2023, during its annual meetings, writes Winston Mwale.
The toolkit has been developed to assist African jurisdictions in securing value-added tax (VAT) in the digital economy by providing support for the effective collection of VAT on e-commerce transactions.
With the proliferation of e-commerce activities, the toolkit offers a valuable strategy for securing VAT revenues, aligning with international standards, and promoting a fair and competitive market environment.
VAT is a major revenue source for most jurisdictions in Africa, representing, on average, over one-quarter of total tax revenues for jurisdictions on the continent.
Safeguarding these crucially important VAT revenues in economies that are being transformed by digitalization and globalisation is a priority for many governments in Africa.
Africa has experienced rapid e-commerce growth in recent years and holds great potential for further strong expansion of digital trade.
The number of African consumers making online purchases increased significantly between 2014 and 2018, and this number is expected to almost double between 2020 and 2025.
The outbreak of the COVID-19 pandemic has been an important driver for continued strong e-commerce growth in Africa. Over 70% of consumers reported an increase in their online shopping since the beginning of the COVID-19 pandemic in leading African e-commerce markets such as Nigeria, Kenya, Ghana, Egypt and Tanzania.
The strong growth of digital trade has created significant challenges for VAT systems globally and in Africa.
Traditional VAT rules often lack effective provisions to impose VAT on supplies that do not require the supplier to be physically present in the jurisdiction of its customers, leading to no or inappropriately low amounts of VAT being levied.
The launch of the ATAF VAT Digital Toolkit for Africa marks a significant step towards addressing these challenges and securing crucial VAT revenues in the digital age.
*Download the toolkit below:
