Everyday digital activities, from buying goods on foreign platforms to streaming series and following social media influencers, generate billions of dollars across Africa. But tax revenue fails to keep pace. This gap highlights one of the continent’s most pressing fiscal challenges in the digital era. Joëlle Traoré, a tax law specialist with a doctorate from the University of Paris 1 Panthéon-Sorbonne and expertise in international taxation, illicit financial flows, global tax reform and domestic resource mobilization, explains how the system works and why it matters.

The reality is simple and unsettling. A global digital platform can sell to millions of African users without maintaining offices, warehouses or staff on the continent. It can generate substantial revenue while paying little or no tax locally. This gap exists because tax systems are built on a long-standing rule: companies are taxed where they have a physical presence. In the digital economy, that rule no longer holds.

As early as 2015, the OECD’s work on base erosion and profit shifting (BEPS) acknowledged that the digital economy can no longer be separated from the wider economy for tax purposes. Yet this recognition has not prevented the emergence of a fragmented global tax framework, often poorly adapted to African economic conditions and inconsistently applied by developed countries themselves.

Fragmented national responses

To stem these revenue losses, several African countries have acted unilaterally. Nigeria introduced a 7.5% value-added tax (VAT) in January 2022 on digital services supplied by non-resident firms with at least $25,000 in annual turnover. Kenya, which imposed a 1.5% digital services tax in 2021, replaced it in December 2024 with a 3% “Significant Economic Presence Tax.” The measure targets companies without a permanent establishment that generate substantial business activity in the country.

Senegal followed in July 2024 by applying an 18% VAT to digital services provided by non-residents. Ghana levies a 15% VAT alongside additional charges, including the NHIL, GETFL and COVID-19 Health Recovery Levy, pushing the effective rate to around 22%. South Africa, one of the earliest movers, has applied VAT to electronic services supplied by non-residents since 2014.

These measures remain largely national in scope. The absence of regional or continental coordination increases the risk of regulatory arbitrage by multinational platforms and weakens Africa’s position in global tax negotiations. Without a coherent approach, the continent risks being bound by rules designed elsewhere.

Gaps in the international framework

While the OECD has produced extensive technical guidance on digital taxation, the global framework remains incomplete. Pillar One of the proposed international tax reform, designed to reallocate part of multinational profits to market jurisdictions, has yet to be fully implemented. More troubling for African countries is the fact that many OECD members continue to maintain preferential tax regimes to attract digital firms, undermining the credibility of the system they promote. Africa cannot afford to remain on the sidelines of a debate whose outcomes directly affect its fiscal capacity.

Administrative and enforcement constraints

Beyond political choices, taxing the digital economy poses significant operational challenges. Tax authorities must be able to determine who is selling what, to whom, from where and at what value. This requires obliging foreign firms to register remotely, tracking electronic payments, supervising digital platforms and adapting VAT systems to online transactions.

The rise of social media influencers illustrates the scale of the challenge. Many earn substantial advertising income paid from abroad without declaring it locally. Cryptocurrencies, online betting and paid content hosted on private platforms further complicate enforcement. These activities expose regulatory blind spots and increase the need for new legal tools and skilled personnel.

Africa’s room to act

The objective is not to slow digital innovation, but to ensure that the sector contributes fairly to public finances.

Several policy levers are available. Tax laws can be updated to define clear thresholds, simplify remote registration and adapt VAT rules to digital activity. At the same time, tax administrations need stronger technical capacity to monitor digital flows and exchange information.

Coordination remains the most critical factor. Sub-regional blocs such as ECOWAS, WAEMU and CEMAC could harmonize tax rules and limit competition between neighboring states. At the continental level, the African Union can provide political leadership, while the African Tax Administration Forum (ATAF) plays a key technical role in supporting national administrations and representing African interests in international negotiations. Public awareness also matters. Citizens, including young digital content creators, need a clearer understanding of the tax obligations associated with online activity. Taxation is not merely a technical issue. It is a question of economic sovereignty.

Digital taxation is no longer optional. It is a requirement for fairness, fiscal sovereignty and sustainable public revenue. Africa has the capacity to define its priorities, coordinate its policies and negotiate from a stronger position, provided it acts decisively. In the digital economy, delay translates into permanent revenue losses. Every transaction, every platform and every screen carries implications for tax justice and economic sovereignty.

Dr. Joëlle TRAORÉ, International and African tax expert