Strengthening the Impact of DPI on Tax Administration

Digital IDs, digital payments and data exchange systems, the three building blocks of DPI, are rapidly being adopted across lower-income countries, with the potential to strengthen state capacity, including tax administration. Yet evidence remains limited on whether DPI-led reforms within tax agencies are improving tax performance and revenue mobilisation. At the same time, realising the potential of DPI for tax requires more than technology adoption or system integration. It depends on the readiness and political will of institutions, the quality of underlying data and IT systems, and the administrative capacity, namely the ability of tax agencies to translate new information into action.

Our research investigates how DPI tools can be effectively integrated into tax administration to support more equitable, efficient and sustainable revenue generation. We will focus on three interconnected questions:
(1) what is the actual potential of DPI to improve tax performance in low-income countries;
(2) what obstacles prevent revenue authorities from leveraging DPI-led innovations;
(3) what does successful DPI-inspired digitalisation reform look like in practice, including the bureaucratic, institutional and political dynamics that shape outcomes.

We draw on experimental and descriptive evidence from Eswatini, Ghana, Rwanda, Uganda and Zambia (as well as from other African countries), and from Pakistan in Asia.