3.1.3 Taxes

Import duties, Value-Added Taxes (VAT) and other taxes add to the cost of the LCCD and peripherals. Policies vary widely regarding the extent to which these taxes are applied.

The World Trade Organization Ministerial Declaration on Trade in Information Technology Products (ITA) was agreed to by 29 participants in 1996. The number of participants has grown to 74, representing about 97 per cent of world trade in information technology products. The ITA calls for the total removal of import duties on ICT goods. Many developing countries, the targeted group for most LCCD projects, have not signed the ITA. Nonetheless, some countries have eliminated import duties on computers even though they are not ITA signatories. In May 2012, many signatories signaled that they would begin informal bilateral and multilateral consultations on expanding the list of products covered by the ITA. 95

Import duties are sometimes used to encourage local assembly, refurbishment or manufacturing. In Brazil’s government auction for LCCDs, one of the alleged reasons OLPC had higher costs than its competitors was because it had to include the cost of import duties. Some other bidders were offering domestically produced computers. In Colombia, imported LCCDs have been rejected as the lowest-cost solution for schools because they do not add as much to the economy as domestically refurbished computers.

Therefore, the impact of taxes on the LCCD program will vary from country to country. As noted, import duties are not an issue in countries that have abolished duties on information technology equipment. VAT also may not be applicable if the computers are shipped directly to the government instead of going through a third party.

95 World Trade Organisation, “Informal talks set to begin on expanding the Information Technology Agreement,” (May 15, 2012), available at http://www.wto.org/english/news_e/news12_e/ita_15may12_e.htm.

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