The World Trade Organisation Renews the Moratorium on Customs Duties for Electronic Transmissions

The WTO Ministerial meeting in June renewed the “Moratorium on the Charging of Customs Duties on Electronic Transmissions”. All WTO agreements must be agreed upon unanimously, and for some time both South Africa and India had indicated that they would vote against it. The EFA has been an ardent supporter of the Moratorium, for the following reasons – there was no clear definition of an “electronic transmission”. Most services sold across borders by ‘electronic transmissions’, like software or business services are recorded and pay taxes.

The claims by some economists that counties were losing billions of US dollars because of the moratorium could not be proved. EFSA also pointed out to the Department of Trade and Industry that the value of the vast majority of untaxed “electronic transmissions” would be so small that the cost of collecting the customs duties would far outweigh the amounts collected. Ultimately, these costs would fall disproportionally on SMEs and the consumer, creating more inflationary pressures.

The matter will be reviewed in 2 years’ time. The next step is to try to ensure that the Moratorium becomes a permanent fixture and does not have to be reviewed every two years. EFSA worked closely with BUSA on this issue.