Alphabet's tech giant Google recently announced that it plans to invest $1 billion for digital transformation in Africa, but this has raised debates about whether the company should pay more taxes to the African countries where it operates.

In good analysis, increasing Google's tax burden would ensure more money flows to Africa's digital transformation, according to Carlos Lopes, professor at the University of Cape Town's Mandela School of Public Governance and former secretary-general of the United Nations Economic Commission for Africa.

"Google doesn't pay taxes in Africa. If it did, it would probably be well above the $250 million a year offered to countries," he said.

NGOs have long warned that giant technology companies like Google, Facebook and Microsoft should pay more corporate taxes to developing countries.

A study by ActionAid, completed in October 2020, estimated a loss of $2.8 billion in up to 20 developing countries. If taxes were being levied, that amount in tax revenue could be used to fight the pandemic.

Africa needs an investment of about $86 billion in infrastructure to support universal internet access. According to Professor Lopes, this would be "nothing" for Google, which benefits roundly from penetrating the continent.

However, the global tax system is poised for fundamental reform under a landmark tax deal reached by G7 countries in June, under which, companies could be taxed in any country where they make more than 10% of profit on sales. On the other hand, an international corporate tax rate (minimum value) of 15% will also be introduced to prevent countries from undermining each other to host tech giants. Some African countries have also unilaterally introduced taxes on tech giants - Kenya, for example, has enacted a 1.5% tax on all digital services, regardless of the company's headquarters.

Google's billion investment in Africa

Over the next five years, Google's investments will focus on improving connectivity, supporting African tech startups and entrepreneurs, and renewing Google's non-profit engagements on the continent.

One of the initiatives is Google's undersea cable project stretching from Lisbon (Portugal) to South Africa, through Namibia and Nigeria, which the company says will improve internet access and accessibility next year.

"What's remarkable about this is that it brings 20% more network capacity than the last cable built to serve the continent," Nitin Gajria, Google's Africa Manager, told the BBC.

The new infrastructure is expected to increase network capacity by eliminating the cost of data to the end user by 21% and making the Internet in Nigeria up to five times faster, according to Gajria. It will also generate up to 1.7 million jobs as the continent's digital economy develops.

The tech giant will also invest $50 million in its Africa Investment Fund, aimed at early-stage startups.