DIGITALISATION AND THE CHALLENGES FOR AFRICAN ADMINISTRATIONS

Abstract

While assessing the recent reforms in the area of digital taxation within the African countries, the article revisits the question of whether there is need for tax policies and further infrastructure to manage and collect Africa’s own share of the much-needed revenue in this era. The article did a country by country analysis of proposals, public announcements and legislation implemented on digital taxation of direct and indirect tax in the digitalised economy by African countries. The article then benchmarks the proposal, public announcements and legislation implemented so far by African countries with the work of the international organisations. It considers the implications of digitalisation for taxation in different tax authorities in Africa. The digital age is transforming everything, the nature of markets and products, how to produce, how to deliver and pay, the scale of capital to operate globally, and human capital requirements. It is also boosting productivity, exposing companies to new ideas, technologies, new management and business models, and creating new channels of market access and all of this at relatively low costs. The digital economy is key to finance sustainable development through increase in tax revenue collections. The provision of social protection, infrastructure and basic services such as education and health care is crucial for development. Sustainability requires that the means to finance these public goods and services should come, as much as possible, from the government’s own resources, that is, tax revenue. This explains the close link between taxing the digital economy and using the revenue to finance development. The specificities of the digital sector and the required tax legal landscape in the African States is also assessed. The article makes policy recommendations for further tax reforms in order to manage revenue collection in the digitalised economy.