OECD: New toolkit to strengthen effective collection of VAT on e-commerce in Africa

A new toolkit to assist African tax administrations with the effective collection of VAT revenues on e-commerce

A new toolkit to strengthen effective collection of VAT on e-commerce in Africa

The Organisation for Economic Cooperation and Development (OECD) today released a new toolkit to assist African tax administrations with the effective collection of value added tax (VAT) revenues on e-commerce.

The VAT Digital Toolkit for Africa provides detailed guidance for the successful implementation of a comprehensive VAT strategy directed at e-commerce. With VAT the single largest source of tax revenue in African jurisdictions on average, the toolkit aims to help governments in Africa secure increasingly significant VAT revenues and to ensure a level playing field between traditional bricks-and-mortar businesses and foreign online merchants.

The VAT challenges of e-commerce growth primarily concern the collection of the tax on booming sales of online services and digital products to private consumers (e.g., "apps," streaming, gaming, ride-hailing) and on online sales of low-value imported goods, often by foreign merchants. VAT may often not be levied effectively on these sales under existing rules in African jurisdictions. Although VAT is a crucial source of tax revenue in Africa, many jurisdictions have not yet implemented the necessary VAT measures to address the challenges arising from the digitalization of the economy. 

The new toolkit is directed at all types of e-commerce and takes account of Africa's specific needs and circumstances. It covers all of the key design, administrative and operational elements of implementing major VAT reforms for the taxation of international e-commerce, including:

  • Policy design and legislative reform
  • Building the infrastructure to support registration and ongoing compliance processes
  • Communication strategy
  • Effective audit and risk management strategies, including concrete measures to tackle VAT fraud associated with online trade

The VAT Digital Toolkit for Africa is last in a series of three regional VAT digital toolkits, following publication of editions for Latin America and the Caribbean and for Asia-Pacific.


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