How best to tax digital financial services (DFS), namely digital payments? This project seeks to address this question and provide governments with a framework to better understand and approach this challenge.

Considering the rapid growth in the use of DFS, including mobile money and other digital payments, governments are confronted with the dilemma of whether and how to tax them to support domestic resource mobilisation. A sudden imposition of direct taxes on money transfers, mobile money and similar transactions, without evidence regarding the impact, could produce undesirable distortions in the market and run counter the goal of tax equity. Moreover, a debate has been missing in the literature as to which role could taxation play in enhancing DFS market development and financial inclusion.

This paper will inform policymakers about how best to approach DFS taxation by analysing the key variables and actors at play, as well as the existing taxation systems for DFS, to later link them to a standard tax assessment framework and a theory of change regarding the impacts on users. This analysis will result in the identification of the key questions that need to be answered to place taxation decisions regarding DFS on a solid evidence base.


Laura Muñoz Perez

Laura Munoz is the former Programme Lead of DIGITAX Programme.

Mick Moore

Mick Moore is a Professorial Fellow at the Institute of Development Studies and the founding CEO of the International Centre for Tax and Development. He is a political economist whose broad research interests are in the domestic and international dimensions of good and bad governance in poor countries, focusing specifically on taxation in Asia and Africa.

Philip Mader

Philip Mader is a Research Fellow at the Institute of Development Studies and works with the ICTD's DIGITAX programme. His research areas include political economy, finance and development, youth employment, financialisation, financial inclusion and, more broadly, market-oriented interventions in development.