The Suggested Approach is aimed at helping African countries that are considering implementing digital service tax to tax transactions of highly digitalized businesses.
The African Tax Administration Forum (ATAF) has suggested an approach to drafting legislation on digital sales tax services.
The Suggested Approach – published on September 30 – has been developed by the ATAF Secretariat and ATAF’s Cross-border Taxation Technical Committee. It is aimed at helping African countries that are considering implementing digital service tax to tax transactions of highly digitalized businesses.
The Suggested Approach is intended to provide African countries with a suggested structure and content for their legislation and possibly the regulations. It also provides a framework that draws from the various digital services tax legislation enacted in other jurisdictions but adapted to meet the specific challenges faced by African countries.
The Suggested Approach proposes that countries set de minimis thresholds which will ensure that they only target large and profitable digital businesses. This approach, coupled with setting modest rates of digital services tax will be important for promotion of investment and growth in the digital economy in Africa, the ATAF noted.