Since October 2025, Senegalese users have been paying a new tax on digital financial services following the adoption of Law No. 2025-17 of September 27, 2025, which amends the 2012 General Tax Code.
The reform, signed into law by President Bassirou Diomaye Diakhar Faye, is built around two main measures affecting electronic payments and money transfers nationwide.
According to Ecofin Agency, the first element establishes a 0.5 percent withholding tax on all payments received by merchants through electronic platforms.
Mobile network operators are responsible for collecting this levy on behalf of the state at the point of transaction.
The second component applies the same 0.5 percent tax to money transfer operations, regardless of the channel used, including mobile money services, electronic transfers, postal transfers, and bank card payments.
This charge is applied per transaction, with a maximum limit set at 2,000 CFA francs.
The government has defined several exemptions from the tax. These include cash deposits; cash withdrawals of 20,000 CFA francs or less within a 24-hour period; standard bank transfers; transfers made within the same payment service provider’s network; transactions conducted by the state or local authorities; and payments related to salaries or study grants.
Authorities introduced the measure in response to mounting fiscal stress and public debt estimated at approximately 118 percent of GDP at the end of 2024.
Officials describe the reform as part of a broader effort to strengthen domestic revenue mobilization and reduce dependence on external borrowing.
By combining the levy on merchant digital payments with the tax on electronic financial transfers, the state expects to generate 230 billion CFA francs over three years.
The revenue is earmarked to support the 2025–2028 Economic and Social Recovery Plan under the “Senegal 2050” National Transformation Agenda, which carries a total budget of 5,667 billion CFA francs, or roughly 10 billion dollars.
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Despite these fiscal objectives, analysts and industry stakeholders warn that the new tax could dampen growth in digital finance, a sector widely recognized as a major engine of financial inclusion, informal entrepreneurship, and everyday economic transactions across the country.
Recent data underline the sector’s rapid expansion. In 2024, the penetration rate of electronic money services climbed to 197.83 percent, compared with just 28.83 percent in 2014.
Traditional banking remained scarce, rising only slightly from 0.96 percent to 1.20 percent over the same decade, while microfinance penetration declined from 1.40 percent to 1.09 percent.
According to GSMA figures, registered Mobile Money accounts in Senegal more than quintupled between 2013 and 2023, increasing from 7 million to 38 million.
Over that period, the total value of Mobile Money transactions grew 3.3 times, reaching 230 million dollars, compared with 70 million dollars in 2019.
GSMA estimates that Senegal’s GDP in 2023 was 6 billion dollars higher than it would have been without Mobile Money, and that per capita GDP linked to mobile financial services expanded from roughly 20 dollars to 300 dollars over ten years.
Industry representatives caution that the tax could reverse some of these gains by raising transaction costs, weakening purchasing power, and encouraging informal businesses and consumers to return to cash-based payments.
The policy also appears to conflict with the Central Bank of West African States (BCEAO) financial inclusion agenda, including its interoperable instant payment platform, PI-SPI, launched last September.
Stakeholders warn that higher transaction costs could slow adoption of such tools at a time when regional financial integration is viewed as an essential driver of future economic growth in Senegal and across West Africa.
Observers conclude that careful implementation will be critical to prevent the tax from undermining the country’s substantial progress in digital financial development.
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Image Credit: Pan African Visions
