• Senegal imposes 0.5% taxes on digital payments and transfers

• Government targets 230 billion CFA in revenue amid fiscal pressures

• Industry warns the tax may slow digital finance and inclusion

Senegalese citizens have been paying a new tax on digital financial services since October 2025. The measure is based on Law No. 2025-17 of September 27, 2025, which amends the 2012 General Tax Code. The reform, signed by President Bassirou Diomaye Diakhar Faye, has two main components.

The first introduces a 0.5 percent withholding tax on all payments received by merchants through electronic platforms. Mobile operators collect the levy on behalf of the state.

The second applies to money transfer operations, regardless of the method used, including mobile services, electronic transfers, postal transfers and bank card payments. The rate is also set at 0.5 percent per transaction, with a ceiling of 2,000 CFA francs.

Several exemptions are provided. These include cash deposits, cash withdrawals of 20,000 CFA francs or less within a 24-hour period, standard bank transfers, transfers within the same payment service provider’s network, transfers by the state or local authorities, and payments of salaries or study grants.

A Move to Harness a Dynamic Sector

Facing severe fiscal pressure and public debt estimated at about 118 percent of GDP at the end of 2024, the government defended the measure as part of efforts to increase domestic revenue and reduce reliance on external financing.

By combining the levy on merchant payments with the tax on electronic financial transactions, the state aims to raise 230 billion CFA francs over three years. The funds are considered essential for financing the 2025-2028 Economic and Social Recovery Plan, part of the “Senegal 2050” National Transformation Agenda, budgeted at 5,667 billion CFA francs (approximately 10 billion dollars).

However, the new tax could slow the expansion of digital finance, a key driver of financial inclusion, informal entrepreneurship and everyday economic activity.

Digital Finance's Growth and Concerns

In 2024, the penetration rate of electronic money services reached 197.83 percent, up from 28.83 percent in 2014. Traditional banking services remained very limited at 1.20 percent, compared to 0.96 percent a decade earlier. Microfinance also declined slightly, from 1.40 percent to 1.09 percent.

According to the GSMA, the number of registered Mobile Money accounts in Senegal more than quintupled between 2013 and 2023, rising from 7 million to 38 million. Over the same period, the value of transactions grew 3.3 times, reaching 230 million dollars compared to 70 million dollars in 2019. The GSMA estimates that Senegal’s GDP in 2023 was 6 billion dollars higher than it would have been without Mobile Money. Per capita GDP linked to mobile financial services grew from about 20 dollars to 300 dollars over ten years.

Industry players warn that the new tax could threaten this momentum. They argue that it may raise living costs, reduce purchasing power, and push informal actors back toward cash payments.

The measure also runs counter to BCEAO’s financial inclusion initiatives, including its new interoperable instant payment platform (PI-SPI), launched last September. If transactions become more expensive, adoption of these tools may slow at a time when regional financial integration is seen as a critical growth driver.

A cautious approach is therefore required to avoid undermining the country’s digital progress.