Digital Financial Services and Digital IDs: What Potential do They Have for Better Taxation in Africa?

Abstract

New digital technologies, such as Digital Financial Services (DFS) and digital IDs, are gaining momentum in Africa and lower income countries (LICs) more broadly. These technologies could have an impact on an increasingly digitised and IT-driven tax administration, since they hold potential to improve a number of core functions of a revenue authority. Yet, increasing evidence on existing technology in tax administration indicates a number of barriers, which are likely to mute these gains. Against this background, this paper summarises critical questions relevant to research and policy to make more effective use of digital technology in contexts of weak fiscal capacity and IT development:

• What is the nature and potential of DFS and digital IDs in the specific context of LICs? • Given the scarce evidence relating to DFS, digital IDs and taxation, what can be learned from how existing data and technology is used in LICs’ revenue authorities? • How can tax administrations make the best use of DFS and digital IDs in the future?

This Research in Brief is a summary of ICTD Working Paper 137.

Les nouvelles technologies numériques, telles que les services financiers numériques (SFN) et les identifications (ID) numériques, prennent de l’ampleur en Afrique et, plus largement, dans les pays à faible revenu (PFR). Ces technologies pourraient avoir un impact sur une administration fiscale de plus en plus informatisée et axée sur les technologies de l’information, car elles sont susceptibles d’améliorer un certain nombre de fonctions essentielles d’une autorité fiscale. Cependant, les données de plus en plus nombreuses sur les technologies existantes dans le domaine de l’administration fiscale présentent un certain nombre d’obstacles susceptibles d’atténuer ces avantages.

Résumé du document de travail 137 par Celeste Scarpini, Fabrizio Santoro, Laura Munoz, Wilson Prichard et Giulia Mascagni.