‘Taxing Internet Transactions Will Kill E-Commerce Industry’

Just as efforts are underway to deepen the use of electronic payment systems and online transactions, there are already attempts by stakeholders to slap the burgeoning industry with taxes.

The Chartered Institute of Taxation, Ghana is spearheading a campaign to get online marketing companies to pay taxes on their services. According to the Institute, platforms such as tonaton.com and OLX have developed into avenues that government can tap into to generate more revenue.

A fellow at the Institute and director of law firm, WTS Ghana, Mr Ali Nakyea said there is a need for online platforms to contribute taxes to the development of the country. He points out that there are gains people are making from the internet, and describes the development as revenue loss for the state.

“The Institute wants to assist government to see how it can fashion out the framework to handle such revenue losses,” he notes.

The proposal to tax the online marketing companies could be described as a prudent one for government’s bid to generate more revenue especially following the launch of the electronic (e) commerce platform by GhIPSS expected to boost online transactions in the country.

However, digital marketing strategist and social media coach, Mr Maximus Ametorgoh disagrees with the suggestion, noting that it is premature to start taxing online firms.

“The e-commerce platforms should not be taxed now; rather, they should be allowed to grow naturally and organically so that other extensions that develop from the fledgling industry can be taxed,” he said.

According to him, most of the existing online portals do not do payments on the platform.

“It’s just a display of items for the majority of people to be able to do window shopping so we cannot afford to go taxing the portals,” he added.

He called for a focus on the volume of transactions so as to grow the industry into a money-making entity.

Internet marketing [also referred to as online marketing, e-marketing, and in some cases digital marketing] refers to all advertising and marketing efforts that use the web and email to drive direct sales via electronic commerce.
It offers so much convenience as buyers can have access to a variety of items just by a click.

In Ghana, because the industry is too young, internet marketing efforts are typically used to compliment the traditional brick and mortar businesses. Recently however, entities like Jumia, Zoobashop and the like are championing online sales with doorstep delivery.

Portals like Tonaton.com and OLX have also positioned themselves as platforms for both buyers and sellers to trade.

Whereas sites like Jumia and Zoobashop make money from direct sales, OLX and Tonaton.com make money through online advertisements especially (Google advertisement) that run along the various classified posted by people. Then they will also let you promote your classifieds on their own website for a price.

But the question still remains as to whether the time is ripe to tax the industry at its infancy.