‘The Evolving ‘Thunder’: The Challenges Around Imposing the Digital Tax in Developing African Countries
This paper addresses the challenges of taxing the digital economy. It promotes digital taxation to reign in the digital economy as part of a state’s taxable base and economic structure. It supports the redefinition of the tax rules governing traditional businesses to include the taxable features of the digital economy. The paper advocates for unilateral tax measures to enable developing African states capture the digitally enabled movement of money. The paper’s methodology is built around the doctrinal method alongside the process of deductive reasoning. Specific countries and their approach to taxing the digital economy is highlighted with the intention of comparing their fiscal regimes approach to unilateral tax measures targeting the digital economy. The literature addressed in the paper focuses on recent international and government responses in highlighting the problem with digital taxation and identifying the key areas requiring policy recommendations, which the paper then offers to provide. Although several academic works and the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) discussion papers have addressed the challenges of taxing the digital economy, there has been little focus on describing the sort of policy recommendations that could effectively guide developing African countries to rely on in enacting their own laws to target the taxation of cross-border digital corporations. This paper offers some of these policy recommendations.