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Rwanda to impose tax on Netflix

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Rwanda is the latest African country to announce plans to tax online services consumed within the country.

This comes a few months after Zimbabwe and Nigeria laid out plans for the collection of taxes from e-commerce and digital companies such as Netflix, Google, YouTube, and Amazon.

According to the Rwanda Revenue Authority (RRA), a proposal has been presented before the Ministry of Finance and Economic Planning from where it will undergo several procedures before implementation if approved.

“When you pay for services such as Netflix, you are using money that you have generated in Rwanda. So, we are asking, why don’t we collect VAT on these services yet they are being paid for by our citizens? If you pay 12 dollars a month for Netflix, why don’t we keep some of that amount at the source here?” Jean-Louis Kaliningondo, the Deputy Commissioner General of RRA said.

A number of African countries have expanded the scope of their indirect taxes to cover digital services, but only a few have so far implemented some form of direct digital services tax.

He noted that one of the big principles about VAT is that it is paid to the country where the service is being consumed.

“If you go to Western countries, for example, France, you find that Amazon pays VAT yet it is not a French company. European countries are collecting VAT on services provided by foreign platforms, he added.

African governments still face a lot of criticisms on their intentions to tax digital/online services. A recent case is the unending controversial E-levy which has caused a lot of confusion in the country.

South Africa already taxes cryptocurrency trade and investment and is making plans to tax companies such as Netflix.

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Highest in East Africa, Uganda’s trade surplus with Congo DR hits $53 million

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According to the Ministry of Finance’s Performance of the Economy report, Uganda had the largest trade surplus with the Democratic Republic of the Congo (DRC) in January, totalling $53.07 million (Ush208.9 billion).

The report, which summarises the monthly performance of several economic sectors, found that the Democratic Republic of the Congo (DR Congo) was the recipient of more exports from Uganda than any other member state of the East Africa Community (EAC), followed by South Sudan ($41.68 million, or Sh164 billion), Rwanda ($23.1, or Sh90.9 billion), and Burundi ($5.25 million, or Sh20.6 billion).

Uganda did, however, report deficits of $88.41 million (Ush348 billion) with Tanzania and $12.39 million (Ush48.7 billion) with Kenya. Meanwhile, exports to its EAC partner states increased to $231.47 million during the performance period, while its imports remained at $209.17 million.

With 37.6% of the total market share, the EAC continued to be Uganda’s top export destination, followed by the EU and the Middle East. Uganda, however, trades at a $267.64 million deficit with Asia, $118.15 million with the rest of Africa, and $6.64 million with Europe.

According to the Ministry of Finance report, Uganda’s total export revenue in December was $616.36 million, up 0.2% from $615 million in November of the previous year. This increase was mostly attributable to higher export revenues from cotton, tobacco, and simsim.

A 6.7% decrease in coffee exports from $470.68 million was recorded as a result of heavy rains delaying harvests and drying out freshly harvested coffee.

Between November 2023 and December 2023, the value of imports fell by 3.1% to $886.24 million, mostly as a result of decreased imports from the private sector, which included, among other things, wood and wood products, electricity, petroleum products, and animals.

With China and India being the main contributors, accounting for 61.9% of the region’s imports, Asia continued to be Uganda’s largest source of imports, accounting for 41.2% of the country’s total imports.

Other noteworthy regions with respective shares of 23.6%, 15.1%, and 10.2% were the Middle East, the East African Community, and the rest of Africa.

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Nigeria’s Central Bank clears another $400 million FX backlog

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The Central Bank of Nigeria (CNB) paid out an additional $400 million in legitimate foreign exchange backlog to individuals who were properly identified, according to CBN Governor Yemi Cardoso.

This was said by Cardoso at the communiqué’s presentation on Tuesday in Abuja during the Monetary Policy Committee meeting. In the meantime, the bank raised interest rates by 400 basis points, from 18.75% to 22.75%.

Cardoso states that the bank is dedicated to clearing the FX backlog for businesses that are owed money and will endeavour to regain the public’s trust.

Nigeria has matured foreign exchange forwards worth over $7 billion, which, despite the CBN’s assurances that the backlog will be cleared remains for worry for investors as the naira continues to decline owing to currency shortages. Approximately $2.5 billion of the backlog in sectors such as manufacturing, aviation, and petroleum has been fully paid.

He said, “In terms of the backlog, we are committed to clearing the backlog of identified and genuine requests that are pending.

“We are committed to doing that and I can tell you that just today, we paid out $0.4 billion to those that were identified, and we are committed to continuing doing so in one form or the other to those genuinely identified and proven cases.”

Under Cardoso’s direction, the CBN has implemented a number of measures meant to boost the bank’s reputation, stabilise the naira, and rein in inflation.

Among these measures are floating the naira, creating clear regulations for BDC, unifying the foreign exchange market, and ending intervention finance, which the governor claimed swallowed up about N10 trillion during the previous administration.

The goal of the CBN reforms was to settle the foreign exchange market, but since the start of 2024, there has been a great deal of volatility, with the naira at one point worth almost N1800 to the US dollar.

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