Burkina Faso has announced the launch of plans to tax e-commerce. Sales of goods and services rendered through e-commerce platforms in Burkina Faso are now subject to value added tax (VAT) for the year 2025.

The tax, set at 18%, has been in force since 1 January. It covers a number of areas, including video-on-demand services such as Netflix, and websites selling consumer products.

As a number of commentators have pointed out, digital transformation means there is no need for multinational enterprises to be physically present in the countries where they operate. This is a major challenge in terms of taxation and lost revenues for African economies.

Hence this new tax measure on e-commerce, which aims to help Burkina Faso achieve its budget revenue target of XOF3149.8 billion FCFA, (about US$4.9 billion) an increase of 4.33% compared to the target in 2024. This money, says the government, will contribute to the financing of defence and security resources, economic investment and social development.

According to the Agence Ecofin news service, the current system stipulates that any purchase, delivery of goods or provision of services made on national territory is subject to VAT. But some purchases or services are made through platforms for which the supplier is not installed on national territory. Managers of these platforms will now have to collect VAT on the product or service and transfer it to the tax administration. 

Agence Ecofin points out that over the past five years, the rate of internet penetration has grown in Burkina Faso, from nearly 38% for 7.9 million subscribers to nearly 82% for 18.8 million subscribers (the latest population estimate is about 23.8 million). In turn, e-commerce has benefited.

So far, however, the government has not provided any information on how it will make this process work, given the problem it is trying to address: getting money from companies that include large foreign firms that have no physical representation on national territory.