19 September, 2024 - Dr. Lyla Latif

The Challenge of Taxation and Jurisdiction in the African Metaverse

Tax and the International Financial Architecture Tax Administrations Fair taxation

As the metaverse is an entirely virtual world, it creates unique challenges for taxation and jurisdiction. Currently, most tax laws in countries are designed to apply to physical goods and services, and it's unclear how tax laws will apply to virtual goods and services in the metaverse. This is a significant issue for African countries, where tax collection is already a challenge due to the informal economy and high tax evasion rates.

One potential solution for African countries is to create new tax laws that specifically apply to virtual goods and services in the metaverse. This would require careful planning and coordination, but it could be a way to ensure that taxes are collected on the profits generated by businesses operating in the metaverse. Another significant challenge for African countries in the metaverse is jurisdiction. As the metaverse is a global virtual world, it's not always clear which country's laws would apply in the event of disputes or criminal activity. This creates an enormous challenge for African countries that need to protect their citizens in the metaverse.

One possible solution for African countries is to work together with other countries to create a set of global laws that apply to the metaverse. This could involve creating an international court system that has jurisdiction over disputes and criminal activity in the metaverse. This would require significant coordination and cooperation, but it could be a way to ensure that African citizens are protected in the metaverse.

In conclusion, the metaverse is a rapidly emerging digital world that has the potential to transform the way we live and work. However, it also presents significant challenges around taxation and jurisdiction, which will need to be addressed by African countries in the coming years. By creating new tax laws and collaborating with other countries to establish global laws, African countries can ensure that their citizens are protected in the metaverse.

Uploaded by Dr. Lyla Latif

I have expertise in public finance and redistribution. My research, legal practice and publications focus on the physical and digital creation, movement, allocation and taxation of wealth, income, profits and revenue towards development needs and advancing progressive tax systems. I also train on international business taxation and on curbing illicit financial flows. My work has benefited African based and international advocacy organisations and think tanks; informed policy and law making at government level and provided pan-African specialist insight to international financing organisations. Outside Africa, I have studied and published on the tax systems of Afghanistan, Bangladesh, Sri Lanka, the UAE and Qatar. I have supported capacity building, strengthening tax literacy and redefining norms around revenue mobilisation, financial flows, digitalisation, realising rights, financing and implementing SDGs, redistribution and fiscal systems in Africa. I am a first-class law graduate from the University of Nairobi, with a double Masters; one in public finance and financial services law and another in public policy and development. I have a PhD in wealth tax and financing public health. As the Chief Executive of Lai'Latif & Co Advocates, I have crafted a unique legal practice that not only excels in corporate and international taxation, and transactions law but also uplifts underprivileged women through a philanthropic wing powered by zakat. My dedication to social justice extends to my prominent roles on the boards of the Tax Justice Network (UK) and the International Lawyers Project. My expertise has been instrumental in shaping tax doctrine and practice in East Africa, as a member of the East Africa Law Society's inaugural Tax Law Committee. I am also a trainer with Capabuild, Rotterdam's premier tax capacity building organisation, imparting my knowledge of international tax norms and rules to revenue authorities in Botswana, Indonesia, and Kenya. As the visionary Chair and co-founder of the Committee on Fiscal Studies, I lead a team of brilliant minds in our quest to reform and strengthen tax systems in the global south. Through research, policy advocacy, capacity building, and tax trainings, I strive to bridge the knowledge gap and empower developing nations to build more robust and equitable fiscal systems. In October 2023 I was appointed by the Ministry of Information, Communications and Digital Economy of the Republic of Kenya to lead on developing a roadmap and regulations for creating an enabling environment for emerging technologies (AI, IoT, 5G) and data governance in Kenya. I have also designed for Tax Justice Network Africa an Anti-IFF Policy Tracker for AU Member States to pilot and evaluate the extent to which their laws, institutions and cross border exchange of information is robust in preventing IFFs.