Besides the global push for digital taxation, which will force multinationals to pay 15% taxes wherever they are, African countries are beginning to create a new tax regime that will see consumers of digital services paying taxes.

Earlier in the week, Zoom, a popular teleconferencing app announced that it will from August 1, 2021 charge Kenyan users digital tax payable to the Kenya Revenue Authority (KRA).

Kenyans will now have to pay a 16% Value Added Tax (VAT) on digital services. The VAT tax on digital services was introduced by the Finance Act, 2019, but in 2020, the Treasury drafted the Digital Market Supply as an addition to the digital taxation framework.

“Taxable supplies made through a digital marketplace, digital scope of taxable supply through a marketplace, downloadable digital content including downloadable mobile applications, e-books and films … digital content for listening, viewing or playing on any audio, visual or digital media,” a statement from the new rules partly said.

The Digital Market Supply, which came into play last year, means that companies operating subscription-based digital services will have to charge consumers for VAT. The firms were given a six-month transitional clause to comply with the new rules.

Zoom is registered in Kenya as a non-resident supplier of electronic services. The communications platform falls under the category of firms meant to remit the 5 percent digital taxes which were made into law in January 2021. The electronic tax will however, be collected from non-VAT registered customers in Kenya.

“If you are registered for VAT in Kenya, you should provide Zoom with your Personal Identification Number (PIN) and a declaration that you are registered for VAT in Kenya. If you are registered for VAT, then no VAT will be charged on the supplies made to you by Zoom,” a statement by Zoom said.

Zoom’s annual subscription rate for premium videoconferencing services is about $250 (Ksh25,000) while the rate for its basic services goes for about $150 (Ksh15,000). This means that Kenyans, both individuals and firms, who consume these categories of services will have at least $25 more to pay for Zoom services.

However, corporations are more likely going to bear the brunt of the new VAT rules as they make more use of the app. Basic users are likely not going to pay for the services since they are limited to packages that can only host a maximum of 100 participants per meeting.

The move may likely kick off a new era of digital tax regime in Africa, as many countries including Nigeria have been mulling digital tax laws that will force online companies to register in the countries where they’re operative and pay taxes. The federal government of Nigeria said in June after it banned Twitter, that the microblogging app need to register and pay taxes among other things to be unbanned.

But like in Kenya, the Nigerian Finance Act, 2019, introduced a provision for non-resident digital businesses to apply 7.5% VAT on their B2C invoices to customers in Nigeria. Twitter does not fall in this category because it doesn’t offer subscription-based services.

To tax multinational digital companies, the world must reach a consensus on how much is to be taxed. Washington has been leading global negotiations that would force multinationals to pay tax wherever they are, and so far, the recommended minimum rate of 15% has got the backing of 130 countries.

The outbreak of covid-19, which shifted a lot of professional activities online, has seen tech firms rake in more revenues. The economic growth, which was powered by multinational services, instigated global calls for a fair international tax system.

“We need to put an end to corporations shifting capital income to low tax jurisdictions, and to accounting gimmicks that allow them to avoid paying their fair share,” US Treasury Secretary Janet Yellen told European finance ministers.

He was on Horeb, and saw a burning bush. The bush was on fire but it did not burn up. So he thought, “I will go over and see this strange sight—why the bush does not burn up.” There are huge business lessons for us here.

First, his attention was needed for a very important message; he needed to be consumed by something uncommon. Second, his bravery was tested – what would he do seeing a burning bush unconsumed by fire? Third, if he passes the test, his offer letter would be signed; “I am sending you to Pharaoh to bring my people the Israelites out of Egypt”.

In companies, only undistracted, focused and committed people are typically called to execute higher missions. Moses was attentive to have seen the burning bush. Are you paying attention to new market opportunities and shifts in customer preferences? Firms typically put the selected ones through tests with uncommon KPIs and targets to see how they respond. Can you stand the burning bush in the Nigerian economy and still deliver great numbers?

Like Moses, do you go into the market or do you just give up and run away from the market burning bush? But note this: if you run from the burning bush, that CEO, Directorship, GM, etc role will not come. Yes, you have just missed an opportunity to LEAD on that role.

And to companies, just as Moses was supported, you need to support the leader once you have sent on that mission. Yes, do not send leaders on missions without support. The Lord prepared Moses and gave him assurances of support all the way. He identified the mission, and gave him a roadmap to present the mission to the elders of Israel.

Just as I AM [the highest authority] empowered Moses, firms must use high authority to communicate and support great missions. Happy Sunday.

Reference: Exodus 3:1-17 New International Version (NIV)

3 Now Moses was tending the flock of Jethro his father-in-law, the priest of Midian, and he led the flock to the far side of the wilderness and came to Horeb, the mountain of God. ² There the angel of the Lord appeared to him in flames of fire from within a bush. Moses saw that though the bush was on fire it did not burn up. ³ So Moses thought, “I will go over and see this strange sight—why the bush does not burn up.”

⁴ When the Lord saw that he had gone over to look, God called to him from within the bush, “Moses! Moses!”

And Moses said, “Here I am.”

⁵ “Do not come any closer,” God said. “Take off your sandals, for the place where you are standing is holy ground.” ⁶ Then he said, “I am the God of your father,^[a] the God of Abraham, the God of Isaac and the God of Jacob.” At this, Moses hid his face, because he was afraid to look at God.

⁷ The Lord said, “I have indeed seen the misery of my people in Egypt. I have heard them crying out because of their slave drivers, and I am concerned about their suffering. ⁸ So I have come down to rescue them from the hand of the Egyptians and to bring them up out of that land into a good and spacious land, a land flowing with milk and honey—the home of the Canaanites, Hittites, Amorites, Perizzites, Hivites and Jebusites. ⁹ And now the cry of the Israelites has reached me, and I have seen the way the Egyptians are oppressing them. ¹⁰ So now, go. I am sending you to Pharaoh to bring my people the Israelites out of Egypt.”

¹¹ But Moses said to God, “Who am I that I should go to Pharaoh and bring the Israelites out of Egypt?”

¹² And God said, “I will be with you. And this will be the sign to you that it is I who have sent you: When you have brought the people out of Egypt, you^[b] will worship God on this mountain.”

¹³ Moses said to God, “Suppose I go to the Israelites and say to them, ‘The God of your fathers has sent me to you,’ and they ask me, ‘What is his name?’ Then what shall I tell them?”

¹⁴ God said to Moses, “I am who I am.^[c] This is what you are to say to the Israelites: ‘I am has sent me to you.’”

15 God also said to Moses, “Say to the Israelites, ‘The Lord,[d] the God of your fathers—the God of Abraham, the God of Isaac and the God of Jacob—has sent me to you.’

“This is my name forever,
the name you shall call me
from generation to generation.

16 “Go, assemble the elders of Israel and say to them, ‘The Lord, the God of your fathers—the God of Abraham, Isaac and Jacob—appeared to me and said: I have watched over you and have seen what has been done to you in Egypt. 17 And I have promised to bring you up out of your misery in Egypt into the land of the Canaanites, Hittites, Amorites, Perizzites, Hivites and Jebusites—a land flowing with milk and honey.’

About 50% of Nigerians are open to leave Nigeria due to the high unemployment rate and explore a better economic future outside the nation. This number was 20% in 2014. Also, close to 50 percent of Nigerian jobseekers face chronic unemployment of more than 2 years. This is contained in the latest World Bank report – ‘Of Roads Less Travelled: Assessing the Potential for Migration to Provide Overseas Jobs for Nigeria’s Youth.’

This report finds that Nigeria’s labor market has not kept pace with the increasing number of labor force entrants in recent years. Combined with rising aspirations of increasingly educated youth, there are continuing signs of migratory pressure in Nigeria’s economy. The recent rise in irregular migration from Nigeria is one manifestation of this problem. Together with steps taken to curb irregular migration, it is essential for countries such as Nigeria to improve their managed migration systems to enable youth to find overseas employment and to benefit from remittances as well as transfer of skills, technology, and investment. The findings presented in this report stems from a deep engagement with stakeholders in Nigeria and abroad and it is our hope that this exercise will support the Government of Nigeria in filling critical information gaps to aid migration policymaking.

This is a challenging report for the nation. We hope our political leaders will act and fix things. I have put my suggestion on how we can create innovation of the future by fixing access to capital. With problems everywhere, what may be missing is the capacity to combine factors of production to fix them. If we can do the matching, among Knowledge, Capital, and Entrepreneurial Capitalism, the issue of Labour could be fixed.