ATAF HIGH-LEVEL TAX POLICY DIALOGUE: ENSURING AFRICA’S VOICE IN THE DEBATE ON TAXING THE DIGITAL ECONOMY

Many African countries have reported concerns about the tax challenges they face as their economies become increasingly digitalised. Digitalisation enables multinational enterprises (MNEs) to carry out business in African countries with no or very limited physical presence. This makes it difficult for African countries to establish taxing rights over the profits the MNE is making from the business activities it carried out. Digitalisation raises the question of how taxing rights on income generated from cross border transactions should be allocated between jurisdictions. The allocation of taxing rights between residence and source jurisdictions has been an issue of considerable concern for African countries for many years.  African countries are generally source countries and tax on a source basis[1]. ATAF members often report that they consider the current nexus and profits allocation rules are weighted too heavily in favour of the residence jurisdiction to the detriment of the source (African) jurisdiction.

Successful tax reforms require the appropriate balance between principles, policy and the implementation by tax administrations. Therefore, the objectives of the Dialogue are to:

• Strengthen Africa’s position in the debate on the digital economy as well as the debate on taxing rights;
• Inform key stakeholders of the various developments taking place in the global tax arena, particularly and specifically to the taxation of the digital economy;
• Galvanise support for African approaches through the technical work of ATAF in championing African position to overcoming the challenges posed by the digital economy;
• Explore how the current proposals advanced by the OECD will impact developing countries and how best African countries can respond.