This policy brief reviews the challenges and potential of taxing Africa’s informal economies, drawing on recent research by the African Tax Administration Forum (ATAF) and the International Centre for Tax and Development (ICTD). It finds that many currently used strategies place disproportionate burdens on low-income operators, yield limited revenue, and risk weakening taxpayer trust in revenue authorities. The paper advocates for a more evidence-driven and targeted engagement with informal economies.
Key recommendations include focusing tax efforts on higher-income earners within informal economies, developing sector-specific tax strategies, improving coordination between state agencies, prioritising poverty-sensitive policies, and engaging informal sector representatives to foster trust. It highlights the importance of research in partnership with revenue authorities in order to design and evaluate effective and inclusive policies on taxing informal economies.
