The taxation of DFS in the broader context of taxing the financial and mobile payments sector: A Cross-country study
Digital delivery of financial services, improving access and efficiency, driving down provider and consumer costs and potentially strengthening financial inclusion, is seen by most governments as a high priority. However, the development of tax systems has sometimes seemed to run in the opposite direction, adding costs to digital delivery, potentially impeding digital roll-out and creating disparities between the taxation of traditional and digital delivery of similar products and services.
Our research team, led by Chris Wales, is working on a background paper that aims at illuminating those disparities by providing a comparative analysis of the taxation of traditionally and digitally-delivered financial services, across a group of low-income and lower-middle-income countries. The paper will enhance our understanding of how such services are currently taxed, identifying the common threads, inconsistencies and opportunities for improvement in the design of this part of the tax system. It will enable government officials and researchers to identify more easily features of their own systems, or of systems they are researching, that may distort the local market, add costs or hamper progress towards digital delivery and financial inclusion. It will facilitate the development of more rational policy, better aligned with broader government economic and social policy objectives.