The African Tax Administration Forum (ATAF) has announced the publication of a paper on the Suggested Approach to Drafting Digital Services Tax Legislation.

The paper notes that there is a significant risk for African countries in waiting to see whether the OECD Inclusive Framework can achieve an international solution to the tax challenges arising from the digitalisation of the economy. In particular, doing so could significantly delay enacting and implementing legislation to ensure countries obtain the appropriate taxing rights on the profits of highly digitalised businesses, which could cost African countries millions of dollars in tax revenue with many such businesses seeing significant increases in their profits during the COVID 19 pandemic.

Given the situation, the paper provides a draft legislation template for the introduction of a digital services tax (DST). This includes a suggested DST rate of 1% to 3%, with a suggested scope of revenue that includes the following:

• Digital services revenue attributable to [Implementing Country] arising from online advertising services;
• Digital services revenue attributable to [Implementing Country] arising from data services;
• Digital services revenue derived from users located in [Implementing Country] arising from the provision of online marketplace or intermediation platform services, other than the following;
• Digital services revenue derived from users, no matter where located, in respect to the facilitation of rental or use of real property located in [Implementing Country];
• Digital services revenue derived from users, no matter where located, in respect to the facilitation of vehicle hire services which commence in [Implementing Country];
• Digital services revenue derived from users located in [Implementing Country] arising from digital content services, online gaming services, and cloud computing services; and
• Digital services revenue attributable to [Implementing Country] arising from any other digital services.

The draft legislation template also includes provisions for determining digital services revenue, de minimis thresholds based on worldwide and country revenue, duty to file returns, appointing local representatives, etc.

Members of the ATAF include Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Comoros Islands, Egypt, Eritrea, Gabon, Gambia, Ghana, Ivory Coast, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Swaziland (Eswatini), Tanzania, Togo, Uganda, Zambia, and Zimbabwe.