Unpacking Tax Relations in Contexts of Fragility: A Case Study of Somalia

The broader tax literature suggests that taxpayers are more likely to pay taxes when states provide ‘reciprocal returns’, including collective public goods and services, basic security, some level of representation, and accountability of public institutions.

While such explanations of taxpayers’ willingness to pay taxes are compelling in the context of developed states, they are less applicable to more fragile polities. In such settings, the state typically has low enforcement capacity and struggles to provide security or effectively deliver public goods in an accountable manner.

This paper seeks to contribute to and bridge gaps in the literature by exploring tax relations in one of the world’s most fragile contexts. It focuses on Somalia, where businesses in the Telecommunications (Telecom), banking, and financial sectors emerged in the context of statelessness.

Summary of ICTD Working Paper 217.