African Tax jurisdictions are often overlooked by suppliers of electronic and digital services which may ultimately result in substantial indirect tax assessments together with penalties and interest.
One of the most prominent topics at the forefront of the African Revenue Authorities are the indirect tax compliance matters relating to non-resident businesses supplying digital services within their respective jurisdictions.
African Revenue Authorities continue to align their indirect tax legislation with international best practise to recover indirect taxes from non-resident suppliers in the digital economy. There is a prominent drive to increase their indirect tax base by implementing tax policies which requires non-resident suppliers of digital services to register and levy VAT on supplies made to residents and/or users based in their jurisdictions.
Some of the most recent countries to have introduced VAT on digital services are Uganda and Tanzania. Various African countries such as Kenya continue to introduce additional VAT rules further clarifying tax policies for non-resident suppliers.
What has become of significant importance is that the African Authorities have started contacting affected digital services businesses to notify them of their tax obligations in the relevant Countries.
It is therefore crucial for Digital Services Suppliers to be proactive by investigating and ensuring compliance in African Countries to avoid surprise notifications from such Revenue Authorities.
Contact VAT IT SA to ensure compliance today.
Written by: Claudia Steyn