NAIROBI, Kenya, Oct 2 – Tax policy experts PWC now say governments across the continent face the complex challenge of modernizing their taxation systems to keep pace with evolving trade patterns.
According to PWC, taxation laws have lagged, especially with the rise of online platforms, mobile commerce, and digital services that defy traditional customs boundaries as Africa’s digital economy grows.
Its head of Tax and Legal Services Job Kabochi noted that one of the key dilemmas for African governments is deciding who should bear the tax burden between the supplier and the consumer.
“The biggest challenge for governments will be balancing domestic tax collection needs with fostering an environment where digital economy players, such as content creators, remain competitive in the international market,” he said.
According to Kabochi, with internet-based trade and mobile services becoming critical components of Africa’s economic landscape, governments have been left scrambling to develop taxation strategies that reflect these new realities.
Countries like Kenya and Uganda have turned to value-added tax (VAT) as a potential solution for digital services.
Traditionally, physical goods passing through customs at borders are easy to tax.
However, digital services, which often bypass these checkpoints, complicate tax enforcement.
His statement comes on the back of a collaboration between an array of African countries and international organizations such as the Organization for Economic Co-operation and Development (OECD) to find lasting solutions like the VAT Digital Toolkit, aimed at helping governments apply VAT efficiently to digital services.
