The application of VAT to e-commerce transactions has proved challenging around the world, including in Africa. Digital services tax on an e-commerce platform does not replace customs duties on physical goods that arrive in a country after being ordered online from other jurisdictions. While currently the customer pays import duties on goods they order from other countries via digital e-commerce platforms, this is set to change. Due to the rapid expansion of online retailing, African countries are looking at ways to simplify the payment of customs duties on the increasing volume of cross-border, business-to-consumer transactions, in the form of low value consignments. They are doing so by seeking to impose VAT on the goods on the supplier side. Consequently, non-resident e-commerce companies that provide goods via online retailing platforms to African countries may have an obligation to be VAT registered in the countries to which they ship goods. In addition to the possible increase in tax due to the OECD’s Pillar One changes, this indirect tax change has further cost implications for multinational e-commerce organizations operating in Africa.
Source Baker & McKenzie
