Analysis of Legal Regime of Taxation on Electronic Commercial Transactions in Nigeria

Abstract

The growth of electronic commercial transactions [e-commerce] in Nigeria has rapidly increased due to advances in telecommunication services. On one hand, e-commerce has allowed companies to engage with consumers worldwide, resulting in significant economic gains. However, it has also led to high levels of tax avoidance as some businesses seek to evade paying taxes. The paradigm shift from a physical commercial environment to a technology-driven one has made it difficult for tax authorities to determine the appropriate tax on profits/income derived from e-transactions. Additionally, the borderless, trans-border, virtual, intangible, and anonymous nature of e-commerce transactions makes it challenging for tax administrators to track and enforce compliance. To address these issues, the Companies Income Tax Act and other tax laws were amended through the enactment of the Finance Act 2019 and 2020. This paper seeks to provide a critical analysis of the legal regime of taxation of e-commerce transactions in Nigeria, including the challenges faced in enforcing the extant law. The paper recommends proper implementations of the various provisions of the enactments in order to boost the country's economic growth through taxation of e-commerce transactions