Effects of Digital Taxation on Tech Business in Africa

digital taxation - cfamedia

Tech business is, on the rise in Africa and the effects, can be seen, in the exponential rise, of start-ups, across the continent.

The tech ecosystem has witnessed, an accelerated evolution and in 2017, tech start-ups, fetched in investments, to the tune of, over $195 million.

The tech ecosystem is growing with an estimated 8.9% in start-ups that are funded, eclipsing 2016. This translates to 51 percent growth of African tech start-ups.

The fact is that, the tech ecosystem in Africa is, a money-spinning sphere and the government, not wanting to be left out, has decided to tap into it, by initiating the idea of digital taxation.

Recently, the Nigerian government decided to charge a 5% tax, on any item purchased, online and this deduction, will be carried out, by banks, on behalf of the government.

A few years back, the government of Uganda, introduced a social-media-use taxation. Kenya too is, not left out, as the government has increased the taxes, on mobile money transfers.

The question now is; why seek to implement this, in a continent, where broadband penetration is, low?

In some locations. tech companies are, also, facing some limiting factors, like infrastructural challenges, which are a growing phenomenon.

The African continent is, a sleeping giant, slowing waking up, to understand the abundance of the natural resources it has, aplenty and it is, highly, imperative that, everything should work, seamlessly.

Africa is, slowly, grasping how best, to effectively, use technology, although, some individuals still prefer physical transactions, rather than, online transactions.

Due to trust issues, but slamming a 5% taxation on items purchased online and mobile money transactions is, like throwing spanners in the wheel of the much desired cashless policy that we are striving to achieve.

Job creation will, also, be affected, as the involvement of people, in the space, will reduce.

Digital taxation could hold negative effects that may draw the African continent, backward, in terms of development.

Featured Image: eureporter.co

Don’t miss important articles during the week. Subscribe to cfamedia weekly newsletter for updates.