Tax incidence is the economic burden of a tax: who actually pays the cost after markets adjust. The person or company that remits the tax to the government is not always the one that absorbs the loss. Part of the burden can be shifted through higher prices, lower wages, reduced margins, or changed demand.
In cyber security, tax incidence matters because security and compliance costs are often passed through complex digital supply chains. A cloud provider, app store, or platform may formally pay a fee, but the real burden can land on customers, developers, or users through pricing changes. Attackers also exploit this idea indirectly: spam, fraud, and denial-of-service attacks are designed to shift operational costs onto defenders and victims. Security teams use incidence analysis to estimate who will bear the cost of controls such as encryption, logging, MFA, and incident response, so defenses are effective without pushing risk or expense onto the wrong party.