EFFECT OF VALUE ADDED TAX ON NIGERIAN E-COMMERCE

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EFFECT OF VALUE ADDED TAX ON NIGERIAN E-COMMERCE | JEVIBE

EFFECT OF VALUE ADDED TAX ON NIGERIAN E-COMMERCE

VAT has developed to be a substantial source of revenue in many developing countries, including Nigeria. Sub-Saharan African countries that have introduced VAT include the Republic of Benin, Côte d’Ivoire, Guinea, Kenya, Madagascar, Mauritius, the Republic of Niger, Senegal, and Togo. According to the facts, VAT appears to have raised its proportion of the nations’ overall tax collections substantially.

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The Value Added Tax Decree was drafted in 1993 and implemented in 1994. (Ajakaiye 2000). The optimal kind of taxation in the Nigerian tax system is a value-added tax (VAT), which has considerably assisted in resource mobilization as well as economic capital building. He also has a favorable relationship with consuming. This has a significant and beneficial impact on the mobilization of revenues.

To punish non-payment, fraud, or resistance to the collection, a State or its functional equivalent imposes a tax on a taxpayer (whether a natural person or a legal entity). Several administrative units also levy taxes. Taxes can be direct or indirect and can be paid in cash or the equivalent of labor. Taxing authorities’ ability to raise revenue determines how much money they can tax citizens and how far their economic policies may be expanded. According to Nigerian law, the federal treasury has the right to impose taxes on individuals and businesses engaged in both the public and private sectors of the economy.

Tax authorities can choose the amount of tax to estimate, collect, and record today. The FIRS Establishment Law of 2007’s Section 8(q) has enhanced the country’s tax administration by creating a more favorable environment.

E-commerce is the practice of buying, selling, and marketing products and services to consumers or ends users through the use of communication technology, primarily the Internet. National economies that were formerly separated from one another because of restrictions on international trade and investment, geographic separation due to time zones and linguistic differences, and ethnic commerce systems have all been affected by the Internet. With e-commerce, small and medium-sized businesses (SMEs) and major corporations may compete on an even playing field in the global market, and local firms and communities can easily join in global social, economic, and cultural networks (Mary-Anne, 1998).

To pay suppliers for the goods or services that customers have purchased, huge corporations must spend administrative expenditures. Taxes are the same as before. Tax revenues from the general population are always larger than what the government can use. Eliminating bottlenecks and leakage in the Nigerian tax system is one of the key goals of the country’s National Tax Policy (NTP). Therefore, it is necessary for tax authorities (state, federal, and municipal) to locate all potential points of tax system leakage in Nigeria and to reduce or stop it. It is understood that revenue loss happens throughout three stages: appraisal, collection, and utilization.

EFFECT OF VALUE ADDED TAX ON NIGERIAN E-COMMERCE | JEVIBE

AN OUTLINE OF THE PROBLEM GOVERNING THE EFFECT OF VALUE ADDED TAX ON NIGERIAN E-COMMERCE

New forms of business communication are becoming more prevalent as consumers and companies benefit from an increasingly virtual or electronic marketplace. With the development of new technologies, it is now possible to make purchases of goods and services online, and in many cases, using real money is no longer necessary. However, the development of electronic commerce and the growth of the Internet have led to a variety of socio-economic and legal problems. Despite its promises, the physical transfer of goods and services via the Internet lacks the clear geographic transit channels that have traditionally constituted this process.

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We should make an effort to present an overview of the legal system of regulation, any legal issues, and the potential for the growth of electronic commerce in Nigeria in this environment.

Nigeria is undergoing an information technology and information technology transformation, but its laws have not yet been adequately updated to reflect this change. Laws should be proportionate to the legal development of electronic commerce as well as consumer protection, in addition to applying to developments in electronic commerce. The gains from this electronic business are not included in our income speeches until they are taxed, given the aforementioned issues with the internet or online commerce.

Generally speaking, the phrase “electronic commerce” refers to economic activities based on the processing and transmission of digital data, such as text, speech, and visual images, which finally result in a value exchange in telecommunications networks. It is frequently used to describe the exchange of products and services over electronic networks, including the Internet and other computer networks. The products are advertised, marketed, sold, paid for, and delivered through online internet services. Electronic commerce reduces the expenses of marketing, customer service, and infrastructure maintenance by taking this into account, leaving more money available for lucrative initiatives. E-commerce has changed the foundations of business and offered benefits to both customers and companies.

Online sales and purchases of products and services are growing daily. Some products and services are electronically purchased and sold online without having a physical or material equivalent. One of the tools put in place by the federal government of Nigeria to produce more revenue is VAT. The majority of well-known Nigerians and interest organizations, however, have opposed its implementation. It appears that VAT causes some issues. In this document, we’ll look at how the VAT affects income creation in Nigeria and the country’s economic development.

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