By Dickson Jere
Two days ago I appeared on BBC TV debating this very question – should tech gains such as Netflix, Facebook, Google, Snapchat and Twitter be taxed in Africa? Those of you who watched my video clip know that I take the view that these tech companies should be taxed to the extent of the revenue they collect in African countries. But this debate is not only about Africa.
The European Union (EU) is seriously considering taxing these tech giants. In fact, at the last G7 summit in July this year, finance ministers agreed that these tech firms like Netflix should be taxed in jurisdiction where they make money even when they are not physically present there. France in July this year passed a law in which these internet-based companies domiciled in the US but offering services in France will be made to pay taxes in France. The new law is called GAFA, which is short for Google, Apple, Facebook and Amazon! Offcourse the US Government is fuming over these proposals – and rightly so as it will also affect her tax revenues.
I, therefore, do not see any reason why Zambia and other African countries should not be thinking along those lines. We need to start thinking outside the box in dealing with the emerging global tech economy. Issues of double-taxation will arise but that can only lead to African countries entering into double-taxation treaties with the US. By the way, so many jurisdictions are coming up with laws to tax these companies! We find to benefit from the global tech economy!
Why tax these tech firms outside the US? The rationale is simple. These digital firms contributes-millions of dollars to the US tax revenue but yet the US account for less than half of these companies revenue. In other ways, they generate income from countries in Africa, Asia and Europe where they do not pay taxes.
I find the debate between opposition leader Hakainde Hichilema and Information Minister Dora Siliya on this subject very refreshing . We need to have such kind of intellectual discourse on matters like this than usual politics and insults. I for one support the taxing of these companies like France has just done!
Netflix’s business model is a platform business model. What happens in this kind of model is that the subscriber signs up at their own cost so meaning you can either sign up or you can’t. This is a contract between the owner of the platform and the consumer. So trying to tax a non indigenous plaform will make us look clueless. Obviously the internet is a threat to many bureaucracies because of the difficulties in regulating it coz anyone with a digital device and a credit card can get services from platforms like netflix which are domiciled oceans away. The internet infrastructure basically is open source. What we should ask ourselves is how can we benefit for this new platform economy by innovating from within instead of taking advantage of companies like netflix. Let’s build our own…
The 4th industrial revolution requires fresh thinking and moving with the times. The traditional selling of vegetables in the streets and corner shops is the simplest and oldest firm of trading. But new forms of selling commodities and services have imerged and proper understanding of these markets will spell out the difference between Africa remainibg in the third world quagmire or moving up with the current development revolution and catch up with the rest of the developed continents . Africa will remain a basket case for as long as its people do not change their minddsets and move with the current times. Africa needs financial resources to develop its people, in frastructure and provide reasonable services to its people. We cannot afford to slumber any longer and watch hopelessly…
The article is empty. Jere is just voicing his support for the tax but what we want to know is how the tax will be effected. That is what is crucial in the debate.
A Zambian living outa’ Zambia needs to pay tax to Zambia when they send money home.
A Zambian investor investing out’a Zambia e.g. Panama, needs to pay tax to Zambia.
Any firm doing business in Zambia whether Virtually or Physically need to pay Tax to Zambia.
Our former assets (Mining companies) sold to infestors by H² and FTJ need to pay ‘fair’ tax to Zambia.
In virtual companies who do you tax Consumer period. And it’s very simple. Dora is wiser than H² Governmentally and otherwise.
The worst thing is to pay tax to a government of thieves. If taxes were put to good use and developmental projects distributed evenly in the country, we would have no problem to pay tax. Now we pay tax and it’s stolen. The ones who steal tax don’t pay tax. Developmental projects are personalised as if they are not funded by tax. So just leave Netflix alone. Infact Netflix doesn’t even make money in Zambia compared to France. There is nothing to tax.
“If taxation without consent is not robbery, then any band of robbers have only to declare themselves a government, and all their robberies are legalized.”
@Middle Kingdom has a very valid point. Lets have policies, zambian companies that are basically in place to see how we can make money out of this internet not only taxation.
Once upon a time @Thorn in the Flesh used to have good contributions and well articulated arguments, but now i think he must have caught something from @Sharon. Really sad!!!
…Let’s build our own platforms. Let’s get something right here, the US-China trade was purely on export tax on physical products not platforms. Netflix is not a factor on the Chinese market because their are just too many local video streaming services in China. Now talking about GAMA in France it’s obvious that the those four companies are not purely platform companies. The supply chains of these GAMA is linked with the Country of domicile. Govt’s prerogative is not only to collect tax but also to create an enabling environment for innovation which can lead to more businesses being established. So the mere fact of collecting an unjustifiable tax does not mean the said government is working, expend your energies productively.
**GAFA
My observation here is that you want to tax individuals not the company, I don’t think it’s practical in that way. Next you will be taxing YouTube users and amazon if you haven’t noticed they all stream videos … would set a bad precedent
Until we start being accountable, and use the currentll tax revenue properly. Digital tax wont take us anywhere. Fire trucks, 48 houses etc. Thats what we should be debating about.
These guys want to tax everything I now hear that even bole holes are being taxed next they will say you pay tax because you’re walking too much on Zambian soil God help us.
Yes they should be taxed but you shouldn’t use stone age thinking in coming up with a solution.
I love our clueless Minister. We might as well throw in Google, Yahoo, Bing and Safari search engine, then we hit YouTube, Facebook, Twitter, Instagram, Snap Chat and all App Stores where some of these Web Based applications can be accessed in Zambia. While at it we should also send our scientist to the Ozon layer and see what the Government can do up there to tackle climate change in Zambia. With such leadership, we might as well abandon GMT time as, while we still have this bunch of headless ministers, I don’t see how Zambia benefits from GMT, our government can advertise for an investor to come in and introduce a new time structure in Zambia.
Kikiikikiki
The issue here is the gvt is that the government wants to tax the consumer and not Netflix. So how does the country benefit
Of course they should be taxed. To argue any other way is not logical.
We tax foreign companies operating and making a profit, we should adapt our laws to tax newer models of business too.
If the companies don’t want that, they shouldn’t operate in the country, period.
This isn’t a political debate but rather an economic one.
Taxation is a double-edged sword. On one hand, taxation can provide revenue into the treasury for funding the budget. On the other hand, taxation can stifle economic growth and investment. What is the way forward? Taxation regimes need to be founded on respect of basic principle, including job creation, attracting investment. Like HH, I am one of those who consider taxing Netflix a retrogressive measure. The reason is that Netflix is providing a service to the youth especially while at the same time attracting Foreign Direct Investment. The status quo is a win-win scenario. There is need for full consultation of public and research on advantages, disadvantages and benefits or either option. Following the France way is not necessarily suitable for a poor developing country like Zambia.
This man should know that there is difference between the Europeans and you here in Africa. Those countries have invested a lot to improve their internet infrastructure and the speed is way better than yours. You, on the other hand, have done nothing to improve your internet nor improve the infrastructure like installing fiber throughout the country but want to tax it for what benefits ot
This man should know that there is a difference between the Europeans and you here in Africa. Those countries have invested a lot to improve their internet infrastructure and the speed is way better than yours. You, on the other hand, have done nothing to improve your internet nor the infrastructure like installing fiber throughout the country but want to tax it for what benefits other than slow internet and unavailability due to blackouts. Also like most have stated tax should be intentional in other words purposefully. What is the purpose of the tax, if it’s a good purpose then it’s good but if it’s just for stealing then it’s useless to tax Netflix, right now we losing a lot of money through corruption and that tax is just going to encourage more corruption
DJ is offside on this one!
Much as GRZ needs revenue, that does not mean taxing everything without wide consultation! We can’t tax ourselves to prosperity! Africa’s tax regimes cannot help generate capital to set up factories and create jobs!
I fully agree