Digital IDs and Digital Payments – Opportunities and Challenges for Tax Administration

Abstract

Tax administrations in Africa and, more broadly, low-income countries (LICs), are increasingly investing in advanced digital technologies, in an effort to build more effective, rules-based and efficient tax systems. Those efforts fit within broader government efforts towards e-government and the establishment of digital public infrastructures (DPI). 1 While these efforts to digitalise tax administration are multi faceted, affecting all aspects of administration, recent years have seen growing attention to the potential impacts of digital ID systems (DIS) and digital merchant payments (DMP), both of which are linked closely to broader discussions of the potential of DPI to strengthen development outcomes. This growing attention has been driven by hopes that building such systems can contribute to significant improvements in tax systems and revenue collection as part of broader and ambitious digitalisation efforts undertaken by African governments (World Bank 2016; IMF 2020).