International Centre for Tax and Development

The Kenyan government believes fisheries have significant potential for development. Yet their development faces many challenges – some of which are connected to a lack of the data needed to ensure their effective management. We do not, for example, have reliable information on the total annual catch. It is therefore impossible to establish whether the existing system of levies and charges is broadly right from the perspective of revenue collection and long-term sustainability of fisheries. This study uses a review of guiding legal documents, in-depth interviews, and analysis of data on domestic taxes collected by the Kenya Revenue Authority. We conclude that the current taxation of fisheries in Kenya does not contribute to either their effective management or generating revenue. This is due to a combination of: (a) a fragmented regulatory and legislative environment, leading to unclear institutional mandates; (b) the inappropriate use of levies and charges purely to raise revenue rather than to ensure sustainable harvests; (c) little attention to sector compliance with general tax obligations, including registration, filing, and payment of taxes such as income tax or value added tax (VAT). These problems are deep-rooted, and connected to the existing legal, institutional, and operational framework. There are some immediate policy steps that could be taken to realise more of the potential for development of the sector. These include ensuring better coordination between national and county-level governments and institutions, and focusing efforts to enforce tax collection on the richest actors in the value chain.

This study compares the implementation of electronic transaction taxes (e-levies) in two West African countries: Ghana (Electronic Transfer Levy (E-Levy)), and Nigeria (Electronic Money Transfer Levy (EMTL)). We employ a multifaceted approach to evaluate differences and similarities in design approaches, focusing on fiscal legal frameworks, policy-making and administration, and observable outcomes, including pricing, market development (usage patterns), and tax revenue. Our findings highlight that the e-levies in Ghana and Nigeria differ due to varying political, economic, and legal dynamics associated with each country. Both countries tax electronic transfer values (amounts) above a threshold, but the nature and structure of these levies vary. Ghana applies a new specific 1 per cent tax on electronic transfers exceeding GH₵100 (US$6.82) daily. Nigeria applies a flat fee of NG₦50 (US$0.034) for transactions over NG₦10,000 (US$6.73). Ghana targets domestic electronic money transfers, featuring a broad spectrum of exemptions, while Nigeria focuses on electronic deposits and electronic money transfers, including remittances, excluding intra-bank transactions. Despite initial opposition, Ghana enacted the E-Levy to include informal economy transactions and enhance domestic resource mobilisation. Electronic transactions have surged in Ghana, while Nigeria's market faces infrastructure challenges but shows slow progress. Telecom operators dominate mobile money in Ghana; banks lead in Nigeria due to delayed telecom licensing. Insights into revenue allocation indicate differing intentions. At the same time, both e-levies contribute a maximum of 2 per cent to overall tax revenue – Ghana aims for road infrastructure, and Nigeria intends to fund social amenities, though evidence is scarce.

Comprehensive population data is often lacking in many developing countries, especially in Africa. This is a critical challenge for tax administrations, who are already grappling with a substantial hidden informal economy. Recent studies highlight the importance of national identification (ID) data for enhancing tax collection efforts. This study looks into the impact of inter-institutional collaboration to share national ID data on tax administration data quality and functions. The Uganda Revenue Authority (URA) has integrated its registration system with that of the National Identification and Registration Authority (NIRA) and Uganda Registration Services Bureau (URSB), which allows it to access ID data for individuals and businesses. The Instant Tax Identification Number (Instant TIN) – an interface pulling this third-party data into the taxpayer registration form – promises a swifter registration process for taxpayers, and better data on taxpayers.

How should governments in sub-Saharan Africa boost their own-source revenue? In this research note I explore the decision of policymakers to expand property taxation into rural areas in the context of developing countries. A policymaker weighing the costs and benefits of rural taxation must first consider the potential net revenue that can be extracted from rural areas. Ultimately, this is an empirical question that requires reliable data on the costs and potential revenue associated with rural taxation. Unfortunately, little such reliable data exists. In this project, I seek to fill this gap by measuring village-level costs and potential revenue associated with property taxation in Kono District in rural Sierra Leone. Based on a set of simulations, I find that property tax in poor, sparsely-populated rural areas can generate positive net revenue. While these gains are modest, they can provide a meaningful source of local government revenue in a context where incomes are near the bottom of the global distribution, and where there are potentially large returns to government spending. These simulations also highlight several features of rural tax collection. First, to increase net revenue, policymakers should prioritise increasing compliance over reducing collection costs. Second, I show that much of the revenue generated from rural taxation is likely to come from a small subset of the total villages. Third, I highlight several trade-offs between salary-based and pay-for-performance (PFP) models of tax collector compensation. I conclude by situating these results in policymakers’ broader calculus for taxing rural areas.

This study investigates the intricate dynamics surrounding the implementation and reception of mobile money taxes, focusing on Ghana as a case study. Consumer-level mobile money taxes, particularly controversial, have sparked large-scale protests, prompting policy revisions in various countries, including Uganda, Cote d'Ivoire and Benin. Ghana’s electronic transfer levy (e-levy) not only followed this trend of public dissent, but also triggered the country’s first budgetary rejection since 1981. The particularly strong reactions, followed by two rounds of revisions, makes understanding what lies behind public perceptions especially important to inform the ongoing debate within Ghana and the region.

Abstract MotivationAppropriately taxing the richest is a priority for African governments, which need tax revenues to invest and pay for public services. In Uganda, the revenue authority launched a unit in 2015 to monitor the tax affairs of high‐net‐worth individuals (HNWIs) and very important persons (VIPs), 393 individuals in all. The unit combined persuasion, assistance, and enforcement.PurposeTo establish the extent to which the unit was able to improve tax compliance by the rich.Methods and approachIn collaboration with the Uganda Revenue Authority, this study builds on taxpayer‐level data on tax filing and payment. The analysis employs a standard difference‐in‐difference framework, exploiting the timing of the launch of the unit (September 2015). It also makes use of the existence of the target group of 393 wealthy individuals and a group of another 1,731 potentially wealthy individuals who have been identified but never included in the unit's operations owing to limited resources. We match the groups using a propensity score algorithm.FindingsThe unit has been only partially successful. While the unit increased the probability of filing a return, especially by VIPs, taxpayers declared less on different measures, with no impacts on tax liability. On tax payments, only a small and significant positive impact was found, again due to complex offsetting responses across tax categories. This study also measures the spillover effect on companies controlled by the richest—again documenting complex compensating reactions and no meaningful impacts on tax take. Lastly, while deterrence is more effective for HNWIs, taxpayer assistance and public shaming are more relevant for VIPs.Policy implicationsThis case shows that the rich can be identified and their tax monitored. It also shows the limits of what can be achieved. The Uganda unit lacked staff; it needed twice as many people to monitor the tax of wealthy persons adequately. Moreover, it was hamstrung by the difficulties of sharing data between different departments of the Tax Authority, among government agencies, and between government and key agents such as banks. Ultimately, the unit did not have the staff and data to challenge the tax avoidance schemes deployed by wealthy people and the companies they own.

The global pool for zakat – one of the five pillars of Islam mandating an annual payment typically equivalent to 2.5 per cent of an individual’s productive wealth – is estimated to make up between USD 200 billion and 1 trillion. States have long sought to harness zakat for their own budgets – and legitimacy. To date, however, there has been no systematic empirical discussion of how citizens perceive and engage with state involvement in zakat and how they perceive state-run zakat funds. These perceptions and experiences are central to important questions of how we conceptualise fiscal transfers and the relationship between citizens and states: if it is legally treated as one, does zakat function like a tax? Do citizens engage with it differently? Does its formalisation strengthen or undermine the social norms in which it is embedded? This paper provides, to the best of our knowledge, the first comparative analysis of how citizens in Muslim-majority countries conceptualise zakat, attempting to situate it between religion, charity, and the state. We do so in the context of three lower middle-income countries (LMICs) – Morocco, Pakistan, and Egypt – representing variation in state involvement in zakat, relying on nationally representative surveys covering 5,484 respondents, of whom 2,648 reported that they had paid zakat in the preceding 12 months. Despite heterogeneity in state practice across the three countries, and in contrast to our expectations, we find commonalities in how citizens perceive zakat. Across our cases, citizens understand zakat as existing beyond the state, even where the state is involved in zakat administration and enforcement. Rather than viewing it as a legal obligation akin to taxation or merely as a charitable payment, Muslims across diverse religious and institutional contexts predominately conceive of zakat as a form of informal tax, rooted in social pressures and sanctions in the afterlife, but existing beyond the limits of state authority. This has important conceptual implications for the study of public finance, which has been predominately state-centric, while suggesting that there are clear limits to states’ ability to harness zakat payments into public finance systems. It also suggests clear limits to the ability of states to ‘harness’ zakat as a fiscal tool through centralised administration or mandated enforcement.

Eastern African countries have codified transfer pricing regulations in their efforts to ring fence corporate tax revenue against profit shifting by multinational companies. Kenya (in 2006), Uganda (2011) and Rwanda (2020) used the dominant OECD transfer pricing guidelines as a template for reform. The wisdom of this approach for developing countries is contested in academic and civil society literature. According to this view, Western states largely dominate rule-setting procedures, and the costly enforcement of transfer pricing drains the scarce resources of revenue authorities. How can we reconcile the critical perspective in global debates with the roll-out of OECD type transfer pricing regimes on the ground? Case study evidence collected in these countries reveals that policymakers prefer anti-avoidance measures that are widespread and considered global practice. The widespread adoption of OECD transfer pricing norms worldwide gives them a unique compatibility advantage – this allows governments to adopt them as a way to raise public revenue, without compromising their attractiveness to investors. These network externalities are among the powerful lock-in effects that have cemented the position of the OECD guidelines in global tax governance. This study complements this narrative with a more bottom-up perspective. This highlights how domestic coalitions drive support for the OECD framework by mobilising both ideational and economic network effects. From this perspective the OECD rules are still an authoritative focal point for policymakers because interested social groups leverage concern about investor attractiveness. Ideational incentives shape bureaucratic policy advice to OECD standards. Civil society organisations, despite their critical stance towards the OECD guidelines at a global level, did not coalesce around a specific alternative – and instead raised the urgency of increasing public revenue.

Around the world, pandemic relief efforts saw renewed attention to state social protection and its limitations. Less attention has been paid to alternative forms of welfare provision, including zakat in Muslim countries. We ask how states and citizens engage with zakat during a crisis through a case study of the Covid-19 pandemic in Pakistan, Egypt and Morocco, drawing on novel and nationally representative survey data from 5,484 respondents. While we might expect citizens to be less motivated to pay zakat at times of personal economic hardship, we find that a large majority of the general population and of zakat contributors perceive zakat as particularly important in the Covid context, and were also more likely to make other charitable contributions. We argue that zakat may play an important role in supplementing state social protection and redistribution in times of crisis. While we find evidence for zakat’s redistributive nature, the diversity of practice and common reliance on social relations need to be considered when looking at its redistributive impact and function in times of crisis.