With businesses increasingly going digital, the digital economy is an area governments are taking a keen eye to make sure these businesses comply to laws and regulations set out by the respective country to trade within its jurisdiction. An insight on how digital businesses operate, how other countries have adapted to the growth of the digital economy and how the local tax base can be expanded by collecting tax from businesses that do not have a physical presence in the country but have access to customers based in the jurisdiction of Tanzania via the internet.

The world is continuously changing, one of the fundamental drivers of this change is digital transformation. Digital transformation is about using the latest technology to do what you already do but better. The global economy is undergoing a digital transformation as well, and it’s happening at high speed. Digital economy is the economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes. The backbone of the digital economy is hyper connectivity which means growing interconnectedness of people, organisations & machines that results from the Internet and mobile technology. The digital economy is taking shape and undermining conventional notions about how businesses are structured, how firms interact, how consumers obtain services, information and goods.

Angola has a 14% VAT for all sales. There is no registration threshold for foreign providers of digital services, so you must register for VAT as soon as you have a single Angolan customer. To register for Angola VAT as a non-resident digital service provider, you must appoint a local tax representative. The country will eventually offer a simplified registration system on its website. For B2B sales, there’s the option of using the reverse-charge mechanism

South Africa introduced their VAT rules for electronic suppliers on 1st July 2014. They do have a lower limit however; below which VAT is not required to be charged or registered for. That is ZAR 1,000,000. Unlike other countries, South Africa does not make a distinction between B2C and B2B sales all are subject to their 14% VAT charge. Pretty much any kind of digital service you can think of is in-scope for their electronic VAT rules. Another point to note is that the South African VAT act is not limited to South African residents. Therefore, your digital business based out of any other country could well be on the hook for VAT there if you meet the thresholds.

The Chinese tax authority is working on reforming of its VAT system and they continue investigating how to tax the digital economy. At least for now, China postpones the full implementation of the new VAT regime for products purchased by consumers in the online marketplaces.

Australia has a 10% GST on sales of low value goods to its consumers by non-resident e-Commerce companies. This includes, digital products such as streaming or downloading of movies, music, apps, games and e-books and services such as architectural or legal services. If you meet the registration turnover threshold of A$75,000 and make these supplies, you will be required to register for GST.