We are witnessing rapid growth of the e-commerce sector in Africa. This is one of the main reasons why more and more countries are mandating the introduction of the VAT regime for foreign providers of digital services or digital goods (intangible products).
Various expert surveys conducted by world-renowned analysts unquestionably agree on one point: the pace of the e-commerce sector and the digital economy will continue to grow in this decade. The business environment in Burkina Faso hasn’t been isolated from this trend.
The Government of Burkina Faso, has acknowledged that the current legislative VAT environment previously established for foreign providers of digital services or e-commerce suppliers isn’t working how it should be. The lack of transparency, technical infrastructure, simplified registration, and reporting systems contributes to the “non-willingness” of these providers to voluntarily register for VAT.
However, the adopted draft of the Finance Bill for 2025 shows the willingness of the Government to regularize the e-commerce sector with transparent and practical rules for non-resident providers (suppliers and platform operators).
Timeline
The National Assembly adopted the draft Finance Act 2025 during the plenary session held during the last week of December 2024. The new rules came into force on January 1, 2025.
VAT on Digital Services
What does the future hold?
Present rules reviewed from the theoretical perspective, provide support for taxing non-resident providers of digital services or intangible-remote goods. The General Tax Code addresses this under the territoriality rules for applying local VAT.
Moving from theory to practice, this is rarely the case. The lack of technical infrastructure and no simplified registration or collection system for foreign providers of digital services contributes to non-registration for this type of supply.
The adopted draft version of the Finance Act for 2025 looks to change this. Specifically, Article 299 of Law No. 058-2017/AN on the General Tax Code is amended as follows:
Sales of goods and the provision of services that have as the place of supply the territory of Burkina Faso orchestrated by foreign or digital marketplaces, including commissions received by operators of e-commerce platforms on the occasion of these operations will be subject to VAT.
The adoption of the draft Finance Bill for 2025, seems like an important step towards the introduction of a VAT regime for supplies of goods and services through foreign digital marketplaces. However, it should be noted that at this moment, there aren’t any practical guidelines from the authorities that have jurisdiction over these subjects.
The rapid expansion of e-commerce transactions hasn’t gone unnoticed by respective authorities. The level of sales and related turnover in previous years shows considerable growth. The lack of transparent tax provisions for foreign digital providers and e-commerce marketplaces deprives state coffers of significant sums connected with collectible VAT.
The adoption of amendments to the General Tax Code through Finance Bill 2025 indicates that the Government is looking to introduce more control into the e-commerce sector, particularly emphasizing non-resident providers.
Aleksandar Delic
1stopVAT Indirect Tax Manager – E-Commerce