A legal appraisal of taxation of electronic commerce in Nigeria

Abstract

Tax is merely imposed for public purpose and for raising general revenue for the State. Tax is charged and payable on all international, interstate and intra state supplies of goods and services. Consequently, all supplies which includes supplies into Nigeria from outside (import) and within Nigeria. Electronic commerce otherwise called E-commerce represents a new business model which operates with very few physical locations, involves customized inventories and storage needs are reduced. It involves less vertical integration and more outsourcing and fewer physical locations as used by a vendor. The servers used in e-commerce are not necessarily tied to a single physical location but can easily be relocated without any interruptions to business operations. Conventional tax legislations presuppose that taxes are levied on the residence and source based. Taxation of electronic commerce is imperative as the world is going digital and e-commerce is here to stay. Nonetheless, it will be an overstatement to say that the prospects of e- commerce will drive the economy to an enviable height. This paper examines the peculiar problems which the tax authorities face with the new innovation in modern business transactions with the existing laws vis-a-vis the collection of e-commerce tax. The paper adopted a doctrinal method of data collection using analytical approach in reviewing the tax laws, statutes, case laws, legal opinions of experts in textbooks and articles relevant to the subject matter of electronic transactions. The work revealed that the existing tax laws provide generally for any type of transactions, whether within and outside thereby making Nigeria one of the countries that provide for taxation of digital economy. The tax authorities have made an inroad towards harnessing the tax yield from electronic commerce. However, in order to fast track these mechanisms in use, the work recommended amendments to the existing tax laws to address the issues that had bedeviled the tax system for clarity of the provisions to the taxpayers and tax administrators and the challenges of inroad into artificial intelligence and digital economy.