Mid-year budget: Fledgling e-commerce industry kicks against tax on sector

Secretary General Anita Wiafe Asinor

The E-commerce Association of Ghana is kicking against the introduction of taxes on the sector in the mid-year budget review, saying the industry is a fledgling one that rather needs support to grow.

Calls have been made by many to introduce taxes on the activities of e-commerce in the country, given its sudden boom in the pandemic when most businesses have adopted online marketing with huge patronage from clients. In fact, the Ghana Revenue Authority indicated earlier in the year that among its 2021 strategies is to introduce an e-commerce tax as part of efforts to boost domestic revenue mobilisation.

However, the association feels any such move is too early for a sector for which it took the impact of the pandemic for it to stand on its feet, as it has struggled over the years due to the reluctance of people to trade via online.

Commenting ahead on the mid-year budget presentation on Thursday, Secretary General Anita Wiafe Asinor said the sector is still evolving and that proper infrastructure, regulation and an understanding of how it operates should take priority over the idea of slapping it with tax.

“If we handle the sector well and understand that we have to build the infrastructure, we will definitely see the e-commerce sector playing a key role in terms of GDP in the near-future. So, what we require from government is the infrastructure, regulations and policies to support the sector,” she told the B&FT on the side-lines of an e-commerce event in Accra organised by the Embassy of Israel.

She expressed worry about the perception that the increase in use of social media platforms for marketing by businesses means the e-commerce industry is making huge profits, whereas the industry is not only evolving but also unstructured and dominated by selling on social media platforms – which makes it difficult to estimate real revenues.

Therefore, any tax introduced (if any at all), she said, must be fair to the industry and will not stifle its growth.

“We understand that government has to look at how to raise revenue, and we have had conversations around how the space should be taxed. So, we believe that whatever is applied is not going to cripple us but help us to thrive.

“Our position is that it must be fair and it is the right type of system, because we are emerging and we would not want a system which does not promote the sector’s growth.

“We cannot stop government but we are happy that it is engaging us, and we hope that whatever is decided on will be empowering to the e-commerce industry and not something that will affect it in a negative way,” she said.

Maiden e-commerce breakfast meeting

Themed E-commerce in Ghana: adapting and thriving, the event is the first of its kind by the Israel Embassy in Accra. It forms part of the efforts to foster collaboration between Ghanaian and Israeli businesses, particularly in the technology and e-commerce industry.

“The sector holds a lot of promise, but we believe there are still technological challenges which need to be addressed; and Israeli companies have suitable solutions which can help drive growth of the sector,” said Ayelet Levin-Karp, Head of Trade and Economic Mission, Embassy of Israel.

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