Page 78 - SAMENA Trends - July-August 2022

ARTICLE SAMENA TRENDS

Figure 3: BBCom 21st Century Financing Models for Bridging Connectivity Gaps - Key Policy Recommendations
digm shifts are required to bring affordable Sector in Africa” , with a particular focus or intangible assets in one jurisdiction and
[15]
and meaningful connectivity to the un- and on broadening the base of contributors being subject to taxation on its consolidat-
underconnected. These include (1) broad- through the possibility of taxation. Its key ed profits in another often lower-tax juris-
ening the base of contributors; (2) ensuring recommendations included that “regula- diction . In addition, certain jurisdictions
[19]
that all who derive benefits from the digital tors should not block or license OTTs (the have implemented digital taxes to address
economy, as consumers or as producers latter at least for now). As for taxation, rules around taxable presence and apply
contribute objectively, equitably and fairly consumer-level taxation should be avoided special turnover-based taxes to digital
towards connecting the unconnected; (3) whilst regulators should take steps to as- companies to generate local contributions.
for such contributions to be made by all semble information enabling them to tax Digital taxes implemented in jurisdictions
ecosystem players, taking into account the larger OTTs (those with substantial reve- typically impose a percentage tax on gross
new realities of the disaggregation of digi- nues across the African continent). Such revenues derived from the sale of online ad-
tal service provision and, therefore, revenue taxation should be done in a coordinated vertising or the use of user data pertaining
generation from underlying network infra- fashion for maximum efficiency and im- to the jurisdiction, with thresholds designed
structure investments; (4) making such pact, working in collaboration with regional to target the tax at companies operating on
contributions sustainable and predictable; and continental organizations such as the a global scale. In this context, the BBCom’s
and (5) for such contributions to be man- Council of African regulators, the Regional Working Group on 21st Century Financing
aged efficiently and disbursed in a timely Economic Communities, the AU and Smart Models for Bridging Broadband Connec-
and prioritized manner. The Report made Africa.” Preceding this study, UNCTAD in tivity Gaps recommends that where imple-
[16]
four key strategic recommendations that its Digital Economy Report 2019 found that mented, a portion of any such tax revenue
act as a foundation for driving connectivi- “Taxation is a key concern for value cap- is earmarked to finance digital infrastruc-
ty and shine a light on a growing narrative ture …. As developing countries are mainly ture development and broadband adoption.
around connectivity – one that emphasiz- markets for global digital platforms, and
es the shared benefits we all enjoy, our their users contribute significantly to the The European Commission is in the pro-
collective responsibility, the commitment generation of value and profits, authorities cess of implementing many new regula-
required, the reform we must face, and the in these countries should have the right to tions and legislation to foster a healthy and
opportunity to enable global connectivity tax such platforms.” [17] In regard of taxa- balanced development of the digital econo-
for all. tion, the OECD has reached agreement on my in Europe. In July 2022, the Digital Ser-
the long-awaited bold new framework on vices Act package was adopted, consisting
In November 2020, Smart Africa published International Tax Reform to address the of the Digital Services Act (“DSA”) and the
[18]
its study “The Impact of OTT Applications international challenge of multinational Digital Markets Act (“DMA”). The package
and Services on the Telecommunications enterprises generating value from tangible targets the creation of a safer digital space

78 JULY-AUGUST 2022