E-Commerce and electronic taxation in Nigeria

  • Uchechukwu Christian Arinze
  • Deborah U. Ebem
  • Agozie Eneh
  • Obianuju Assumpta Ezugwu
Keywords: Taxation, e-commerce, disintermediation, OECD. Model. convention.


This study is centred on whether to tax e-commerce business segment or not. Key attributes of e-commerce business model that has tax implications include - disintermediation, increase magnitude of cross-border transactions, digitization of information which makes it difficult to identify source and destination of transactions, difficulties in carrying out audit trails and verifying parties to transactions, and tax collection concerns with cross-border digital transactions. In resolving the e-commerce tax conundrum, secondary data was the major source of information for this study and was obtained through archival documents, electronic books and journal publications, online research publications by authoritative research firms and textbooks on law and taxation studies. E-commerce poses a lot of questions to tax administrators and governments on how to protect their revenue base. At one extreme, there is the view that e-commerce should in some sense be allowed to take place in a tax-free environment. At the other extreme, there had been speculation on the introduction of new taxes specifically designed to tax e-commerce, e.g. the business income tax (BIT). Neither of these views proved acceptable to governments. The first would lead to governments being unable to meet the legitimate demands of their citizens for public services. It would also induce tax distortions in trade patterns. The second approach could hinder the development of e-commerce and lead to the technology becoming tax-driven. This paper proposes the adoption of the Organisation for Economic Cooperation and Development (OECD) model taxation convention for the taxation of e-commerce, creation of tax intermediation body, which is relevant for the digital world, utilize Internet Service Providers (ISPs) as a responsible authority for collection, calculation and payment of electronic tax (e-tax). This proposal is aimed at developing a simple, uniform and fair system, which will reduce the burden imposed on retailers and preserves sovereignty of the countries in case of cross-border e-commerce transactions.

Keywords: Taxation, e-commerce, disintermediation, OECD. Model. convention.


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eISSN: 1597-4316