Nigeria’s Minister of State for Finance, Taiwo Oyedele, urged African professionals to strengthen their skills to tackle digital taxation challenges and play a more active part in the global digital economy.
“Tax value where it is created. Africa must not be a passive participant in the global digital economy. We must assert our taxing rights. We must build capacity for digital tax administration and engage strategically in global negotiations”, he said.
Oyedele spoke last Thursday at the closing ceremony of the African Union’s Fifth Sub-committee on Tax and Illicit Financial Flows (IFFS), hosted by the Nigeria Revenue Service as part of the Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning, and Integration.
His speech came after comments from Thulani Shongwe, Head of Africa Multilateral Cooperation at the Africa Tax Administration Forum (ATAF), who noted that Africa continues to fall behind in taxing the digital economy.
The digital economy encompasses economic activities, transactions, and business models powered by digital technologies such as the internet, AI, big data, and mobile platforms. It reshapes traditional industries by linking people, businesses, and devices, boosting efficiency and creating new data-driven revenue streams. Taxation in this space involves updated rules aimed at capturing revenue from multinational digital companies that earn significant income in a country without having a physical presence there.
The digital economy has brought new challenges to Nigeria and the African continent, making it hard to track non-resident companies, their earnings, profits, and online activities due to the lack of reliable data.
Despite the hurdles, Oyedele pointed out that the UN’s ongoing efforts offer a valuable opportunity for Africa to embrace. He stressed that working together is key, as division has proven costly for the continent.
“Whether in tax policy, whether in incentives, treaty negotiation, or enforcement, we must move toward greater coordination and harmonisation”, the minister said.
He cited the African Continental Free Trade Area as a key opportunity for African countries to align their fiscal systems with trade ambitions, arguing that integration requires coordination to be effective.
He emphasised three key priorities for the continent: strengthening domestic systems through investments in tax administration, process digitisation, and capacity building; deepening collaboration across countries, institutions, and regions; and remaining committed to reform, even when challenging.
“Reform is not optional. It is the seed for progress. If you don’t plant it, it will be hard for progress to come”, he concluded.
During the session on Progress Reports for STC Recommendations on International Tax Cooperation with the G20, OECD, and Inclusive Framework, ATAF’s Shongwe highlighted Africa’s slow progress in taxing the digital economy and called for revisions to certain positions.
He pointed to global mobility as an important factor and urged African practitioners to think about its impact, especially with the continent’s youthful population.
“Africa has the world’s youngest population, and increasing digitalisation will drive migration for job opportunities. This creates a risk of micro-PEs as people work remotely for foreign companies. To protect our tax bases, we must track this trend and factor it into our approach to tax, inequality, and growth on the continent”.
He also stressed the importance of sharing information among African countries, given the factors influencing them as they transition from the OECD.
“Work on crypto assets and real estate is crucial for information exchange, especially for African countries—around 30 of which are Global Forum members. We must consider the slow adoption of automatic information exchange in these nations”, he concluded.
