Retaliatory measures on DSTs

KEY READING FOR THE WEEK Last week’s newsletter was on how much Kenya could expect from the OECD tax framework. This week’s newsletter is on what kind of retaliatory measures Kenya could expect. The 2021 version of the DST is clearly discriminatory because only non-resident firms have to pay it. The United States Trade Representative’s Office (USTR) is monitoring the Kenyan DST. The USTR has previously filed Section 301 claims against Austria, India, Italy, Spain, Turkey, and the United Kingdom. Section 301 of the U.S. Trade Act of 1974 authorizes the US President to take retaliatory action, such as increasing […]

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Kenya’s DST Part 2

KEY READING FOR THE WEEK Last week’s newsletter was on Kenya’s Digital Services Tax (DST) and estimated the amount of tax revenues the Kenyan Revenue Agency (KRA) could expect. This week we’re investigating the how much Kenya could expect from the OECD digital tax deal that was signed on the 8th of October. These two tax deals are in competition because one of the conditions of the OECD deal is that all unilateral digital taxes have to be withdrawn. Kenya has participated in the negotiations for the OECD deal but has decided not to sign it. It’s not clear why […]

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Kenya’s Digital Services Tax

KEY READING FOR THE WEEK The focus of this week’s newsletter is the Kenyan Digital Service Tax (DST). Formally introduced in 2020, it was set at a rate of 1.5% of gross transaction value on digital platforms for both residents and non-residents. In 2021, the DST was amended to exclude residents so that only non-residents firms (i.e., firms without a physical presence in Kenya) were required to pay the DST. The DST is charged on all electronic services, such as mobile applications, eBooks, software, films and music. It excludes communication services (text messages, phone calls, etc.) and it excludes digital […]

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Weekly digest for 5 Nov 2021

KEY READING FOR THE WEEK On October 8th 2021, the OECD announced a tax deal for the digital age. The new tax deal, signed by 136 out of 140 member states, representing over 90% of global GDP, will allocate around US$125 billion in profits to countries around the world. In the second part of our series on ICT taxes, the focus is on unpacking how the OECD deal will work. The first step is to define the problem. The central issue is that, because Netflix doesn’t have a physical presence in Kenya, Netflix is not liable for any corporate income […]

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Weekly digest for 29 Oct 2021

KEY READING FOR THE WEEK On October 8th 2021, the OECD announced a “ground-breaking” tax deal for the digital age. The new tax deal, signed by 136 out of 140 member states, representing over 90% of global GDP will allocate around US$ 125 billion in profits to countries around the world. As part of our new series on ICT taxes, the focus of this blog is going to be on the bigger picture: is the OECD tax deal going to mean more tax revenues for developing countries or are there other, more effective ways to increase tax revenue? Tanzania is […]

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Weekly digest for 22 Oct 2021

KEY READING FOR THE WEEK The main story this week is from South Africa, where the messaging app Moya is generating lots of interest. It has 3.2 million active monthly users. That’s still pretty small compared to WhatsApp, which has around 25 million active users per month in South Africa. But Moya is growing fast and it has a key selling point: text messages are free even if the users data balance is empty. Moya uses reverse billing technology so that customers don’t face a charge. Of course, there are caveats: images and video’s don’t qualify for free data. The […]

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Weekly digest for 15 Oct 2021

KEY READING FOR THE WEEK There are two main stories for this week: the launch of free public wifi in Malawi and the upcoming auction of 3500MHz spectrum in Nigeria. Free public wifi in Malawi The first story is about the launch of free public wifi in Malawi. The government has launched 32 sites across the country. The wifi sites are available in schools, hospitals, libraries and marketplaces. The funding comes from the Digital Malawi project, funded by the World Bank. A total of 481 sites have been identified for funding. For the Digital Malawi project, USD28.3 million of the […]

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Weekly digest for 8 Oct 2021

KEY READING FOR THE WEEK There are two main stories for this week: global tax reform and spectrum allocation in South Africa. Global tax reform The first story is about the deal for international tax reform brokered by the OECD. 136 countries have signed the deal, which has 2 pillars: Pillar (1)  is the re-allocation of taxation rights from home countries (i.e., where a corporation has its headquarters) to markets where they have business activities and earn profits. Pillar (2) is a global minimum tax rate of 15%. Pillar 1 is the most significant for Africa from a digital service […]

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Weekly digest for 1 Oct 2021

KEY READING FOR THE WEEK This week’s main story is a report from the GSMA on Mobile Internet Connectivity in 2021, though we’ll focus on the key trends for sub-Saharan Africa. The main statistic in the report is that half a billion people in sub-Saharan Africa are living within an area covered by mobile broadband but do not use the Internet. The GSMA considers mobile broadband to be either 3G or 4G. 3G coverage in sub-Saharan Africa is 81% in 2020 compared to 51% for 4G. Another factor that the GSMA identified as an obstacle to Internet usage was affordability, […]

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Weekly digest for 24 Sep 2021

KEY READING FOR THE WEEK This week’s main story is a new report from Vodafone on Accelerating 4G access in Sub-Saharan Africa. The main focus of the report is how to increase access to smartphones. Low mobile broadband coverage and low smartphone penetration are the primary reasons why many MNOs in Africa still see increasing voice and SMS traffic. It’s also one of the main reasons why the transition to a data-centric business model is taking longer in Africa compared to the rest of the world. Vodafone estimates that 2G phones are sold in China between US$5-8 and resold in Africa at […]

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