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Ivory Coast digital services VAT: A wakeup call for startups

The Ivory Coast is imposing VAT on digital services provided by nonresident companies. The decision is in line with global trends. Digital services VAT is also becoming increasingly popular across Africa. Many of the continent’s largest economies, including Nigeria, South Africa and Kenya, have already implemented some form of digital services VAT.

Nonresident digital platforms that meet the specified criteria must now collect and account for VAT. Ivory Coast’s VAT rate is 18%.

Digital services VAT in Africa and beyond

Why are so many countries updating their VAT rules to tax nonresident digital services companies? Two reasons are commonly offered.

First, and obviously, digital services VAT is potentially an important source of revenue. After all, digital services are increasingly central to the global economy. 

There’s another important reason. Consider how easy it is to provide digital services to customers around the world. If they have a decent internet connection, they can access streaming or gaming or any other online service.

Increasingly, local VAT registered businesses face competition from online services established abroad. If only the local businesses are obliged to charge VAT, then foreign businesses potentially have a competitive advantage. Applying digital services VAT to nonresident services thus creates a more even playing field for local and overseas companies. 

Why startups need to plan for VAT

More countries are developing VAT frameworks for digital services VAT. Practically speaking, that means that digital startups will incur VAT obligations as they grow. 

VAT compliance is complex enough in one country. Managing VAT at a global scale is an enormous challenge. After all, the VAT submission procedures may be completely different in Thailand, France and the Ivory Coast.  

Startups need to get ahead of their VAT obligations. With an integrated centralised digital services VAT solution, you can focus on what really matters: growing your business. 

 

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