Digital Entrepreneurship, Taxation of the Digital Economy, Digital Transformation, and Sustainable Development in Africa

Favourate Y. Mpofu
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Favourate Y. Mpofu: University of Johannesburg

Chapter Chapter 10 in The Fourth Industrial Revolution in Africa, 2023, pp 193-219 from Springer

Abstract: Abstract New and improved technologies have emerged leading to the digitalization of the various sectors of the economy. Entrepreneurs and small businesses have harnessed these digital technologies and platforms to improve their business leading to the term “digital entrepreneurship.” Owing to the growth in the digital economy, traditional international tax legislation has been considered inadequate to effectively tax this economy. Discussions by members of the OECD Inclusive Framework on Base Erosion and Profit Shifting are underway on the best internationally inclusive policy to tax the digital economy. African countries have also introduced different taxes to collect revenue from the digital economy. The different avenues include mobile money taxes, excise taxes, value-added taxes, and digital service taxes. There are disagreements among researchers on the implications of these taxes on the economy. Employing a comprehensive literature review, this chapter sought to assess the influence of taxation of the digital economy on digital transformation and digital entrepreneurship. This chapter sought to contribute to the theoretical literature on taxation of the digital economy and digital entrepreneurship which are subject areas that are in their embryotic stages. In addition, digital entrepreneurship is crucial for economic growth, employment creation, and the realization of the United Nations 2030 Sustainable Development in a continent bedeviled by a significant informal economy, high unemployment rates, endemic poverty, political instability, and with most of the fragile states in the world. The research found that the impact of taxing the digital economy in Africa had a double-edged sword effect. While on the other hand taxing the digital economy increased government revenue to finance public expenditure and facilitate economic growth, it crippled digital transformation and the expansion of digital entrepreneurship. The implications are mixed, revealing both possible positive and negative outcomes.

Keywords: Digital economy; Taxation; Digital transformation; Digital entrepreneurship; SDGs (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:aaechp:978-3-031-28686-5_10

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DOI: 10.1007/978-3-031-28686-5_10

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