BD Insider, Letter 95: Of taxes and regulations in Africa's tech ecosystem

Johnstone Kpilaakaa -

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Hello BD Insider,

In this letter, we look at:

  • Nigeria's plan to tax non-resident digital firms
  • Cameroon's 0.2% tax on mobile money transactions
  • Matters arising from Twitter's ban in Nigeria

Let's dive in!

Nigeria to tax non-resident digital firms 6% turnover
Nigeria's Minister of Finance, Budget and Planning, Mrs Zainab Ahmed, disclosed last Wednesday that — per the 2022 Finance Act — non-resident digital firms operating within Nigeria will be charged a 6% turnover.

Mrs Zainab said the regulation is part of fiscal reforms to boost revenues and diversify the oil-dependent economy. At around 4.5% of GDP, Nigeria has one of the lowest tax rates in the world and has struggled to increase tax collection from the non-oil sector.

"If you visit Amazon, we are expecting Amazon to add VAT charge to whatever transaction you are paying for. I am using Amazon as an example. We are going to be working with Amazon to be registered as a tax agent for the FIRS [Federal Inland Revenue Service]", she said. "Amazon will now collect this payment and remit it to the FIRS".

She added that this is in line with global best practices, "we have been missing out on this stream of revenue".

Cameroonians outraged by 0.2% mobile tax
Cameroon has imposed a 0.2% tax on the transfer and withdrawal of money via mobile wallets effective from January 1. This is part of the country's 2022 Finance Bill President Paul Biya signed last November.

By implication, 4,000 XAF ($7) will be charged in taxes on the transfer of one million XAF ($1,725) between two Cameroonians or residents in the country. Except for bank transfers and electronic transactions meant for tax and customs duties, the 0.2% tax applies to every transaction via mobile wallets.

This tax will affect financial inclusion efforts, Rebecca Enonchong, a tech entrepreneur in the country said, "the mobile tax will hit the poorest segment of the population for whom mobile money is the only access they have to financial services".
With over 19.5 million mobile money accounts, Cameroon has joined Uganda, Zimbabwe, Ghana and Tanzania in taxing mobile money. In 2020, the number of mobile wallet transactions rose by 15%, hitting 27.5 billion, and the total value jumped by 23% to $495 billion, according to the GSM Association.

Twitter users in Nigeria may no longer need a VPN
Twitter has complied with all the terms given by the Nigerian government to restore its services, a local newspaper The Nation disclosed last week.

Last October, President Muhammadu Buhari said "following the extensive engagements [with Twitter], I have directed that the suspension be lifted but only if the conditions are met to allow our citizens to continue the use of the platform for business and positive engagements".

An anonymous source told the Nation, "Twitter has finally met six conditions set by the Federal Government for the lifting of the ban on its service in Nigeria at the close of business in 2021. The operation of Twitter will now be fully regulated, including the opening of office and deployment of a Country Representative. We can now hold an officer responsible for any infraction".

"Twitter only requested that the Federal Government should allow it to open the office in 2022 because there was no provision for it in its last year’s budget. Since we are in a new year, we are expecting that the office will take off soon", the source added.

In June Nigeria placed a ban on Twitter stating the "persistent use of the platform for activities that are capable of undermining Nigeria’s corporate existence"

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Thanks for reading
Have a great week ahead!
Written by Johnstone. Edited by Daniel