This guidance note, addressed primarily to social protection analysts and practitioners, provides guidance, resources (e.g. data, software) and examples of best practice in the analysis of 1) the poverty and inequality impacts of government taxes and transfers, and 2) the role of tax policy in social protection financing and its sustainability.

The guidance note answers the following questions:

• What are the types of analyses that consider taxation and social protection jointly?
• How do I get started designing or commissioning a new study on the incidence, poverty and inequality impacts of taxes and transfers?
• Where do I go for additional information and support?
• What are the main methodological issues I need to be aware of in fiscal incidence analysis?
• How do I interpret the policy findings of a basic fiscal incidence study – what does the study (not) tell us?

This guidance note was produced as part of project on social protection and tax funded by the Department for International Development (DFID).