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South Africa May Break Ranks On E-commerce Taxes

05 December 1999

South Africa is set to break ranks with the EU and US by imposing tax and tariffs on e-commerce transactions by the end of next year. The South African Department of Communication announced that it will prepare legislation for late next year to remove existing barriers between electronic and traditional transactions and subject them to traditional commerce regulations, including tax and trade tariffs.

The announcement follows a long investigation and consultation process by the Department of Communications into the regulation of e-commerce and has hijacked control of the policy debate from the Department of Finance which has not yet finalised its position on e-commerce taxation.

Despite a clear policy position that electronic and traditional transactions should be subject to the same regulations, the announcement by the Department of Commerce was riddled with politically ambiguity. Only last week the Communications Minister Ivy Matsepe-Casaburri said that the Government intends to harmonise local regulations with international e-commerce guidelines, and that South Africa would support the extension of the moratorium on e-commerce tariffs at last week's WTO meeting in Seattle.

While the South African Government is clearly serious about regulating e-commerce, it remains to be seen whether it will break ranks with international forums such as the OECD and WTO by extending existing taxes and tariffs to also cover e-commerce transactions before any international standards have been agreed. This will be one of the key issues that the Government will need to consider before it releases its Green Paper on e-commerce in the first quarter of next year.


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