DIGITAX: Digital Financial Services, Digital ID, & Tax

DIGITAX is a three-year research programme funded by the Bill & Melinda Gates Foundation. With the rapid expansion of mobile money and other digital financial services (DFS), as well as the increased relevance of digital IDs across Africa and other lower-income countries, the DIGITAX program aims to generate knowledge and evidence to support governments in overcoming the challenges and leveraging the opportunities presented in two main areas:

The first is the design of appropriate and effective taxation of DFS and its providers, which can impact the development of these markets and financial inclusion.

The second is harnessing the potential that the expansion of DFS and digital IDs presents, in terms of extensive new data, for the improvement of tax collection and administration.

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News and Events:

24 June 2022
Past Event
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Webinar “Ghana’s E-Levy: two months in, what do we know?”

DIGITAX is delighted to announce the webinar ‘Ghana’s E-Levy: two months in, what do we know?’. This upcoming webinar is the first in a series of webinars on Taxes and Digital Financial Services (DFS) organised by the International Centre for Tax and Development. The Ghana E-Levy, implemented on 1 May 2022, is a hot and…

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April 2022
News
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Job Opportunity: Senior Communications Consultant, DIGITAX Programme

Closing date for applications: May 8th, 2022 The International Centre for Tax and Development (ICTD) is looking to hire a skilled and motivated Senior Communications Consultant to lead on the design and execution of the communications and engagement strategy for the DIGITAX research programme. DIGITAX is a three-year research programme funded by the Bill &…

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Blogs:

September 2022
by Hannelore Niesten

On 20th September 2022, Tanzania eliminated the levies on certain electronic money transfers. These changes will be effective from 1st October 2022. The levy was first introduced in July 2021. Legislation to clarify the details is still pending, but it appears that levies will continue to be applied on mobile money (MM) transfers. What are…

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Publications:

September 2022
Mobile Money Taxation and Informal Workers: Evidence from Ghana’s E-Levy
by Nana Akua Anyidoho, Max Gallien, Mike Rogan & Vanessa van den Boogaard

In recent years, governments in lower-income countries have increasingly introduced specific taxes on mobile money transfers as a means to raise revenue. These are often explicitly promoted as a way of taxing informal economic activity, but critics have noted their potential negative impact on lower-income groups. Ghana’s electronic transfer levy (E-levy), introduced in May 2022,…

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Should Governments Tax Digital Financial Services? A Research Agenda to Understand Sector-specific Taxes on DFS
by Mary Abounabhan, Laura Munoz, Giulia Mascagni, Wilson Prichard & Fabrizio Santoro

Low-income countries are facing strong pressure to bring in more revenue at home. With digital financial services (DFS) rapidly expanding across Africa and other low-income countries a growing number are therefore considering new taxes on DFS. In light of the heated debate over DFS taxes, this paper explores the rationale for these taxes and their…

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June 2022
Enablers, Barriers and Impacts of Digital Financial Services: Insights from an Evidence Gap Map and Implications for Taxation
by Philip Mader, Maren Duvendack, Adrienne Lees, Aurelie Larquemin & Keir Macdonald

Digital financial services (DFS) have expanded rapidly over the last decade, particularly in sub-Saharan Africa. They have been accompanied by claims that they can alleviate poverty, empower women, help businesses grow, and improve macroeconomic outcomes and government effectiveness. As they have become more widespread, some controversy has arisen as governments have identified DFS revenues and…

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Mandating Digital Tax Tools as a Response to Covid: Evidence from Eswatini
by Fabrizio Santoro, Razan Amine & Tanele Magongo

Many tax authorities changed the mode of interacting with taxpayers from physical to online as a response to the Covid-19 pandemic, to diminish the spread of the virus. Eswatini, the country under study, mandated the use of online tax filing through the e-Tax system for all income tax payers, coupled with a zero-cash-handling policy for…

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March 2022
Digital Payments Taxation Factsheet: Uganda
by Adrienne Lees & Daniela Villacreces Villaces

Digital financial services are growing in Uganda and play an important role in supporting the financial inclusion of the poor. Recently, the Ugandan government has increased the level of taxation on traditional and digitally-delivered financial services, with some taxes applying specifically to digital payments. Download our factsheet to learn more.

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February 2022
Digital financial services and digital IDs: What potential do they have for better taxation in Africa?
by Fabrizio Santoro, Laura Munoz, Wilson Prichard & Giulia Mascagni

New digital technologies are now being widely used in Africa and lower-income countries (LICs). This has had an impact on tax administration, which has been increasingly digitised. Specifically Digital Financial Services (DFS) and digital IDs can improve tax administration. They have the potential to identify taxpayers more easily, communicate with them better, enforce and monitor…

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February 2022
Should Governments Tax Digital Financial Services? A Research Agenda to Understand Sector-Specific Taxes on DFS
by Laura Munoz, Giulia Mascagni, Wilson Prichard & Fabrizio Santoro

Digital financial services (DFS) have rapidly expanded across Africa and other low-income countries. At the same time, low-income countries face strong pressures to increase domestic resource mobilisation, and major challenges in taxing the digital economy. A growing number are therefore advancing or considering new taxes on DFS. These have generated much debate and there are…

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February 2022
The Promise and Limitations of Information Technology for Tax Mobilisation
by Oyebola Okunogbe & Fabrizio Santoro

Tax revenue in many low-income countries is inadequate for funding investments in public goods and human capital. While tax systems have been adopting new technologies to improve tax collection for many years, limitations to in-person interactions due to COVID-19 have further highlighted the role of information technology in tax mobilisation. This paper examines the potential…

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October 2021
There and Back Again: The Making of Uganda’s Mobile Money Tax
by Adrienne Lees & Doris Akol

Mobile money is widely seen as a powerful tool for enhancing financial inclusion and, potentially, improving the economic well-being of the poor. As the mobile money sector, and its turnover, have grown, certain governments have increasingly viewed mobile money transactions as a potentially convenient tax handle. The resulting tax measures are often controversial and draw…

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July 2021
There and Back Again: The Making of Uganda’s Mobile Money Tax
by Doris Akol & Adrienne Lees

This paper evaluates the appropriateness of the tax policymaking process that led to the introduction, and the later adaptation, of a tax on mobile money transactions in Uganda in 2018. We examine the unusual source of the proposal, how this particular tax diverged from the usual tax policymaking process, and whether certain key stakeholders were…

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Team members

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Dr Philip Mader
Programme Lead & Research Lead
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Dr Fabrizio Santoro
Research Lead
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Rebecca Simms
Programme Manager
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Njeri Okono
Communications and Engagement Consultant
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Christopher Wales
Senior Research Advisor
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Rhea Millward Thompson
Senior Project Officer
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Awa Diouf
Post-Doc Researcher
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Adrienne Lees
Research Officer
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Celeste Scarpini
Research Officer
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Mary Abounabhan
Research Officer
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Moyo Arewa
Research Officer
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Hannelore Niesten
Research Officer
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Razan Amine
Research Consultant
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Dr Marco Carreras
Post-Doc Researcher

Research Projects:

Current Project
Evidence Gap Map on Digital Financial Services: Enablers, Barriers, and Impacts
Project Researchers: Philip Madar, ICTD, Maren Duvendack, Adrienne Lees, ICTD, Aurelie Larquemin & Keir Macdonald, IDS

Many governments are considering taxing digital financial services (DFS), but to tax them properly we need to understand what enables or prevents people using DFS, and what impact DFS usage has. Our Evidence Gap Map (EGM) brings together all the evidence-based research available on these enablers, barriers and impacts. An EGM serves to pinpoint where…

Project Outputs

Working Paper
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Past Project
The Promise and Limitations of Information Technology for Tax Administration
Project Researchers: Oyebola Okunogbe & Fabrizio Santoro, ICTD

This research has been conducted in partnership with the World Bank. The paper examines the potential of technology in transforming tax administration by helping to identify the tax base, facilitate compliance, and monitor compliance. It also identifies possible limitations to the use of technology arising from inadequate connectivity infrastructure, lack of adoption (or resistance) by…

Project Outputs

Working Paper
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Current Project
Understanding Retail CBDC’s and their Potential Role for Revenue Authorities
Project Researchers: Laura Munoz Perez, ICTD & Moyosore Arewa, ICTD

This research assignment focuses on exploring the potential role of Central Bank Digital Currencies (CBDC) on taxation regimes and RAs in developing countries. This research will outline the concept of CBDC and its various potential designs, an overview of current testing or CBDC implementation plans across the developed and developing world, possible taxation use cases…

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Current Project
Inter-Institutional Data Sharing and Cooperation for Better Tax Administration – Evidence from Uganda
Project Researchers: Fabrizio Santoro, ICTD, Moyosore Arewa, ICTD, Ronald Waiswa & Jane Nabuyondo

Building on background work from Arewa (forthcoming) and connecting with recent evidence on gaps in URA administrative data (Mayega et al 2019, 2021) this study attempts to address the three following interrelated questions: How is the integration with other public institutions’ databases taking place in Uganda? Which are the challenges both URA and other institutions…

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Current Project
Leveraging DFS and Digital IDs for Improved Tax Collection in the Togo Revenue Authority (OTR)
Project Researchers: Dorothy Kang’oro, Ignatius Odongo & Fidèle Kanyarugero Ngerero

This research will primarily seek to answer how the Togo Revenue Authority (OTR) can harness the potential of DFS to improve tax administration in the country?

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Current Project
Examining Digital Payments in Rwanda as a Medium for Tax Compliance
Project Researchers: Ludovic Bernad, Yves Nsengiyumva, Benjamin Byinshi & Fabrizio Santoro, ICTD

This study explores how digital payment data can be used to solve tax compliance challenges in Rwanda by identifying the potential that digital transactions can have on tax compliance, perceptions, and the tax administration’s efficacy.

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Current Project
Tax Revenue in Emerging Markets and Developing Countries: Do Mobile Financial Services Matter?
Project Researchers: Alphonse Noah, Martine Tania Azoa Balengla, Joseph Keneck Massil & Bernard Clery Nomo Beyala

This research project plans to investigate whether and how the rapid expansion of mobile financial services (mobile money, mobile credit, mobile savings) influences domestic resource mobilisation in emerging markets and developing countries (EMDCs).

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Current Project
Extent of Adoption and Effective Data Utilisation from Digitalised Tax Payment Systems and Digital IDs among States’ Taxing Authorities in Nigeria
Project Researchers: Abdulsalam Mas’ud, Sani Mohammed Damamisau & Yusuf Abdu Gimba

This research project will assess the extent of the adoption of these technologies among states’ taxing authorities and how the data from these technologies is being used in strengthening tax administration effectively.

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Current Project
The Making of Zimbabwe Mobile Money Tax
Project Researchers: Simbarashe Hamudi

An analysis of the policymaking process followed in Zimbabwe for the introduction of the money transfer tax.

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Current Project
Impact of Compulsory e-Payments on Compliance in Eswatini
Project Researchers: Fabrizio Santoro, ICTD, Razan Amine, ICTD & Tanele Magongo

This paper spurs from the interest of the Eswatini Revenue Authority (partners in the study) and evaluates the impact of the mandate of electronic filing for income taxes, as implemented in Eswatini in September 2020 in response to the COVID emergency. By relying on a rich set of taxpayer-level administrative data from the revenue authority,…

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