From Bitter Lemons to Lemonade: The Fiscal Promise of Digital Service Taxes in Sub-Saharan Africa

This paper assesses the performance of digital service taxes and related fiscal measures in sub-Saharan Africa. Using an unbalanced panel of 47 countries over 2017-2022 and a difference-in-difference-in-differences (DDD) framework, it estimates the effect of digital tax adoption on goods-and-services tax revenue relative to payroll taxes - a fiscally unrelated comparison tax head. The results show that digital tax adoption is estimated to increase consumption-based tax revenue by about 1.8 percentage points of GDP. However, gains are uneven - depending on governance quality, digital readiness, and policy design. The study highlights implementation challenges and draws policy lessons for sustainable digital taxation.