E-commerce revolution chews into VAT revenue
ZIMBABWE and her African peers are worried over the declining Value Added Tax (VAT) earnings on the back of a fast growing digital/electronic trade, popularly known as e-commerce, whose taxation is not clearly covered under existing regulations.
Intense discussion on the matter took centre stage here at the 4th International Conference on Tax in Africa, as regional tax administrators, academics and policy makers sought avenues of harnessing the digital tax dividend through embracing innovation and technology.
Zimbabwe Revenue Au t h o r i t y (Zimra) commissioner general, Ms Faith Mazani, who is among the top delegates and her team, also made a presentation on Wednesday where she highlighted the challenges the country is facing in taxing the growing tide of intangible digital products and services.
She said the country was losing potential revenue to online shopping, digital payments and startups that are operating outside the tax bracket.
Her peers from the region also expressed the same sentiments.
The regional mood was fully captured in a collective conference outcome statement at the close of the high-level tax indaba yesterday.
The meeting observed that when countries introduced VAT, there was a huge jump in revenue but worriedly noted the gains are being eroded by unregulated digital trading. “Revenue shot up and immediately went down as a result of more significant trading through e-commerce, which existing VAT legislation had not previously foreseen. “While e-commerce has resulted in decreased VAT revenue collections, it has provided authorities with an opportunity to enhance the audit trail through the use of data-driven methodologies,” reads the outcome statement.