DIGITAL TAXATION IN NIGERIA: ISSUES, CHALLENGES AND THE WAY FORWARD

James Odia () and Sarah Akonoafua ()
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James Odia: Department of Accounting, Postal: University of Benin, Benin City, Nigeria, https://journal.citn.org/
Sarah Akonoafua: Department of Accounting, Postal: University of Benin, Benin City, Nigeria, https://journal.citn.org/

Journal of Taxation and Economic Development, 2022, vol. 21, issue 1, 75-92

Abstract: The paper examines the concept of digital taxation globally and in the Nigerian context where Digital Taxation in Nigeria was discussed. The regulations discussed covered; Digital Permanent Establishment Rules (Finance Act 2020); Companies Income Tax (CIT) and E-commerce; Personal Income Tax and E-commerce and Value Added Tax (VAT) on Electronic Commerce. Having reviewed various theoretical frameworks, the Optimal Taxation theory was reviewed as it relates to the concept of digital taxation. The challenges and potentials of taxing digital transactions in Nigeria and globally were also discussed. These factors include: digital infrastructure, digital platform, digital financial services, digital entrepreneurship, and digital skills. The paper argues that the Finance Act, 2020 tends to provide an avenue for better taxation in Nigeria. That means the previously non-existent tax leakages in the Nigerian digital economy would be eliminated due to the new tax rate. A newly created tax rate should reduce the already unheard of tax leakages in the Nigerian digital economy. However, extant laws in place did not cover transactions involving individuals, thus some tax avoidance is possible. While Nigeria has great potentials for entrepreneurship, it has a minor footprint in the global digital economy in terms of digital goods and services exports.

Keywords: Digital Taxation; Digital Infrastructure; Taxation (search for similar items in EconPapers)
JEL-codes: H20 H27 O55 (search for similar items in EconPapers)
Date: 2022
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