How Tanzanian’s Levy on Mobile Money Affects Small Businesses

Low-income countries in Africa recently started imposing taxes on mobile money and digital services as a strategy to increase tax revenue. However, there is still limited evidence on the tangible impact of these taxes, or the ideal structure for a well-designed, fair, and transparent tax policy in this area.

The introduction of a new government levy on mobile money in Tanzania on 1 July 2021, in addition to the existing 18 per cent value added tax and 10 per cent excise duty, triggered widespread public outcry. Citizens and critics expressed concern about the potential impact of the tax on low-income households, particularly on the financial inclusion of marginalised groups. Consequently several adjustments were made to the e-levy, until it was partially abolished in July 2023.

Summary of ICTD Working Paper 213.