Leveraging Digital Public Infrastructure for Payment Delivery and Inclusion

This report is a technical document that examines the design and implementation of the Devolve ICMS program, a personalized value-added tax (VAT) cashback initiative in Rio Grande do Sul, Brazil. It utilizes the World Bank's G2Px framework to analyze the systems and infrastructure that support this program. The report provides a detailed assessment based on administrative data, beneficiary surveys, and qualitative interviews, illustrating the essential components required for a modern VAT cashback program. It discusses how Devolve ICMS employs digital tools to enhance equity, improve compliance incentives, and streamline service delivery. Additionally, the report outlines operational trade-offs and opportunities for aligning policies with contemporary government-to-person payment practices. The findings offer practical lessons for Brazil's national VAT reform and for other countries exploring equitable alternatives to VAT exemptions, emphasizing the importance of digital public infrastructure in achieving these goals.