East African countries are racing towards taxing digital services revenues in a desperate move to boost revenue collections, narrow fiscal deficits and tame excessive borrowing.
Rwanda has announced plans to start taxing digital services such as Netflix and Amazon as the country looks to expand its tax base, but there are fears the decision could scare off investors from the budding digital services market.
Details about which platforms will be taxed, the modes of taxing and projected amount that Rwanda looks to gain are still unclear since the proposal is still being reviewed by the Ministry of Finance and Economic Planning.
Rwanda Revenue Authority (RRA) is expected to conduct an impact assessment before implementation of the policy.
The taxman has been looking for ways to expand its tax base even as its collection exceeded targets by over $60.1 million in 2020/2021 despite disruptions.
Jean-Louis Kaliningondo, RRA’s deputy commissioner-general said as the market for digital services in Rwanda grows, it is only fair that the country gains from it.