AN ANALYSIS OF REGULATORY REGIMES FOR THE TAXATION OF ELECTRONIC COMMERCE IN NIGERIA

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AN ANALYSIS OF REGULATORY REGIMES FOR THE TAXATION OF ELECTRONIC COMMERCE IN NIGERIA

Abstract: 

No doubt, the advent of Information and Communication Technology (ICT) has greatly impacted human interaction ranging from political, religious, social and business transaction. The Information and Communication Technology (ICT) has contributed in a no small measure to the advancement in business transaction as it has taken the manner and channel of commercial transaction beyond the traditional method. Electronic Commerce, though a terminology recently introduced to the psyche of the Nigerian commercial transaction, it is fast gaining ground as it has contributed to the Gross Domestic Development. However, instead of government at national and at international levels to be benefitting from e-commerce in term of revenue to the government, the reverse is the case. Globally, taxation is a vexed question, and taxing electronic commerce creates additional challenges. This notwithstanding, electronic commerce holds tremendous potentials as a formidable source of governmental revenue in the light of globalization and increasing automation of commercial transactions in Nigeria. National and states tax authorities are struggling to find mechanisms to collect the anticipated significant revenues derived from taxing e-commerce profit. Government is yet to feel the impact electronic commerce in terms of revenue generation to the government. Therefore, this work examined the factors proved to be responsible for this ugly situation ranging from the fact that there is no extant law regulating electronic commerce in Nigeria to the archaic law on taxation which makes it practically difficult if not impossible to bring cyber income within the tax box, the ubiquitous nature of cyberspace where this electronic commerce takes place is being exploited as an avenue to evade and avoid tax payment, non-characterisation of electronic commerce to e-commerce in tangible products, intangible products and in services. The work employed the doctrinaire research methodology in analysing some tax statutes relating to taxation, examining the challenges in taxation of e-commerce which includes difficulties in exercising jurisdiction to tax cyber income, displacement of physical presence in electronic transactions, difficulties in assessment and computation of cyber income and lack of wherewithal on the part of the tax authorities in tracing of electronic commerce. It is quite unfortunate that there is no extant law regulating e-commerce in Nigeria the result of which is loss of revenue to the government. The worked was concluded by recommendations which are as a matter of necessity required for effective and efficient means by which e-commerce can be taxed.

TABLE OF CONTENTS

Title Page

Approval Page ………………………………………………………………………i

Acknowledgement…………………………………………………………………   ii

Dedication…………………………………………………………………………. ii

Table of Contents…………………………………………………………    …………iv

Table of Cases……………………………………………………………………… v

Table of Statutes ………………………………………………………………… vi

List of Abbreviations……………………………………………………………vii

Abstract…………………………………………………………………………..viii

CHAPTER ONE

GENERAL INTRODUCTION

1.1. Background to the Study…………………………………………………………1

1.2. Statement of Problem……………………………………………………………4

1.3. Aim and Objective of Study…………………………………………………….5

1.4. Justification of Study……………………………………………………………6

1.5. Scope and Limitations of Study…………………………………………………7

1.6. Research Methodology…………………………………………………………..7

1.7. Literature Review…………………………………………………………………8

1.8. Organizational Layout…………………………………………………………..14

CHAPTER TWO

THEORETICAL AND ANALYTICAL DISCOURSE ON E-COMMERCE IN NIGERIA

2.1. Introduction…………………………………………………………………………16

2.2. Nature and Scope of Internet…………………………………..………………….17

2.3. Definition and Nature of Cyberspace…………………………………………….19

2.4. Definition and Nature of Cyber jurisdiction …………….……………………22

2.5. The Definition and Nature of E-Commerce……………….…………………23

2.6. The Concept and Nature of Tax………………………….…………………..30

2.7. The Concept of Cyber taxation………………………………………………31

2.8. Conclusion …………………………………………………………………..32

CHAPTER THREE

REGULATORY REGIMES FOR E-COMMERCE TAXATION IN NIGERIA 3.1. Introduction …………………………………………………………………33

3.2. Regulation of Electronic Commerce under the Companies and Allied Matters Act..34

3.3. Central Bank Guidelines on Electronic Commerce………………………….…….37

3.3.1. Guidelines on the Automated Teller Machine (ATM) 2010……………………37

3.3.2. Guidelines for Card Issuance and Usage in Nigeria, 2014………………………..40

3.4. Assessment of the Power and Functions of the Federal Inland Revenue Service (FIRS) under Federal Inland Revenue Service (Establishment) Act, 2007……………44

3.5. Assessment of E-Commerce Taxation under Value Added Tax Act …………….52

3.6. Assessment of Cyber Income under the Personal Income Act …………………..56

3.7. Cyber Income under the Companies Income Tax (Amendment) Act, 2007………60

3.8.        Guidelines within the framework of Organisation for Economic Co-operation and

Development……………………………………………………………………        62

3.9. Possibility of Cyber Taxation in Nigeria……………………………………66

  1. 10. Conclusion…………………………………………………………………67

CHAPTER FOUR

CHALLENGES TO TAXATION OF ELECTRONIC COMMERCE IN NIGERIA

4.1. Introduction………………………………………………………………….68

4.2. Jurisdictional Challenge of Imposing Sales Tax on Electronic Commerce…….. 69

4.3. Tax Avoidance and Tax Evasion in E-Commerce……………………………… 78
4.4. Residence Issues and Taxation of Electronic Commerce………………………. 83
4.5. Challenges in the Enforcement of Cyber Tax Legislation……………………. 87
4.6. Cybercrime as a Challenge to E-Commerce Taxation ……………………….. 89
4.7. The Challenges of Infrastructures……………………………………………. 91
4.8. The Challenge of Assessment and Computation…………………………….. 93
4.9. Skill and Knowledge of Electronic Commerce by Tax Authorities and officers….  96

4.10. Conclusion………………………………………………………………………… 100

CHAPTER FIVE

SUMMARY AND CONCLUSION

5.1. Summary………………………………………………………………………….. 101

5.2. Findings…………………………………………………………………………… 105

5.3. Recommendations………………………………………………………………… 108

5.4. Concluding Remarks……………………………………………………………..   109

BIBLIOGRAPHY

TABLE OF CASES

  1. In Engineer Samuel Egbedina Akinbiyi v. Lagos Island Local Government Council &Ors, ……………………………………………………………………………………..15
  2. Aeromaritime Nigeria Limited v. Lagos State Board of Internal Revenue, ….15
  3. Attorney General of Lagos State v. EcoHotels,…………………………………16

Mathew v. Chicory Marketing Board (1938) 6 CLR 263,270……………………… 33

  1. Maine-v-Grand Trunk Ry.co 142 US. 217; 217-19 (1891)………………… 72
  2. Ire-v-Dwce of Westminister……………………………………………………84
  3. 7up Bottling Company Plc v-l-s-IRS…………………………………….……85
  4. continental Sales Ltd v. R. Slipping Inc. ……………………………….…….86
  5. Eco drill Nigeria Ltd v. AkwaIbom Board of Internal Revenue………….…….88

TABLE OF STATUTES

  1. Companies and Allied Matters Act (CAMA)……………………………… 14
2. Company Income Tax Act…………………………………………. 8
3. Company Income Tax (Amendment) Act, 2007……………….. 96
4. Cybercrime (Prohibition, Prevention) Act, 2015………………… 29
5. Cyber Security Strategy, Act………………………………….. 45
6. Evidence Act, 2011……………………………………………… 44
7. Federal Inland Revenue Services (Establishment) Act, 2007……. 52
8. Guidelines on Automated Teller Machine (ATM) 2010 ……… 46
9. Guidelines for Card Issuance and Usage in Nigeria…………….. 49
  1. Guidelines within the framework of Organisation for Economic Co-operation and Development……………………………………………………….67
  2. Internet Tax Freedom Act, 1998………………………………………..26
  3. Money Laundering (Prohibition) Act……………………………………. 51
13. Personal Income, Tax Act…………………………………………. 8
14. Personal Income Tax (Amendment Act 2011……………………… 96
15. Taxes and Levies (Approved List of Collection) Act…………….. 4
  1. United Nations Commission on International Trade Law (UNCITRAL)…. 28
  2. The Value Added Tax Act…………………………………………..8, 17, 52

TABLE OF ABBREVIATION

  1. ATM (Automated Teller Machine) ….…………..……………………….……..105
  1. CEN (Capital Export Neutrality)……………….…………………………………..73
  2. CIN (Capital Import Neutrality)………………………………………………….73
  3. CFA (Committee on Fiscal Affairs…..……………..……………………………68,
  4. CAMA (Companies and Allied Matters Act)………………………………….14
  5. EDI (Electronic Data Interchange)……………………………………………25
  6. EMV (EuropayMastercard Visa)……………………………………………. 41,
  7. FIRS (Federal Inland Revenue Service)………………………………………94
  8. ICT (Information Communication Technology)……………………………….2, 83
  9. LGRC (Local Government Revenue Committee )…………………………….94
  10. NFIU (Nigerian Financial Intelligence Unit)……………………………………..50
  11. OECD (Organization of Economic Co-operation and Development)……..…106,
  12. PAYE (Pay as You Earn) ………………………………………………………….96
  13. PCIDSS (Payment Card Industry Data Security Standard )……………………….46
  14. PE (Permanent establishment )…………………………………………………….80
  15. PIN (Personal Identification Numbers)…………………………………………….44
  16. SME (Small-Scale Enterprises)…………………………………………………….13
  17. SBIR (State Board of Internal Revenue)…………………………………………..94
  18. UNICITRAL (United Nations Commission on International Trade Law)…….38,
  1. VAT (Value Added Tax) –              –              –              –              –              –              –              -6

CHAPTER ONE

GENERAL INTRODUCTION

1.1         Background to the Study

From the down of history, co-existence among human beings has always been shaped and reshaped by certain events. These range from natural events and most of the times, events brought about by man in a quest for better life.

Man‘s quest for a better life has brought about Information and Communication Technology (ICT) which has greatly affected all aspects of human endeavours. It is a regime that has shaped various aspect of human behaviour in way that is unprecedented.

The breakthrough in science which led to Information and Communication Technology (ICT) has led to a world whereby business transactions can be carried out without the parties involved having to come together physically for negotiation, performance and payment for the goods bought or the services rendered. This of course is a system that was not contemplated at the making of our law on business transaction and taxation in Nigeria which has become a challenge to the government on revenue generation.

There is hardly any government today that does not rely on taxation measures not only to provide the much needed revenue for socio-economic development but also to reduce the inequalities in wealth distribution in the society1. Thus the need to finance and sustain government and its machinery in the discharge of it responsibilities has been the traditional connotation of taxation.2 In Nigeria like many other countries, the proceeds from taxation which includes taxation of income profits, capital gains, property, entertainment, merriment, sales or purchase of goods and services, stamp duties, excise duties, export

1Adeoye I (2008), Significance of Taxation in a Nation, Journal of Private and Commercial Law, Department of Private and Commercial Law, Faculty of Law, University of Ado-Ekiti Nigeria; Vol. 1, p.1

  • Akanle O(1991), The Government, The Constitution and The Tax Payer. In Akanle O.(ed.) Tax Law andTax Administration, Nigeria Institute of Advance Legal Studies, Lagos, p1

duties etcetera constitute major sources of revenue for the government.3 It is therefore means that we are in the era of tax consciousness among the various governments of the Federations4 for each government from the state to Federal government is conscious of the tax it is entitled to under the law.5

Tax collection and administration in Nigeria in this digital age poses challenges to both practitioners and administrators. This is not unconnected with the facts that billions of transactions are carried out monthly through internet or to put properly transaction in the cyberspace without the knowledge of the tax authorities.

However, it is most unfortunate that electronic commerce was not in contemplation at the time making of tax statutes which poses challenges to the tax authorities in Nigeria.

It is a common knowledge that the world wide adoption of Information and Communication Technology (ICT) has immensely altered and enhanced human interaction and our way of life for the past three decades.6 The world‘s transition to information age has indeed changed the mode and increased the pace of global socio-cultural and economic activities through the tool of Information and Communication Technology (ICT) and adoption of electronic commerce.7 This adoption of e-commerce is in no doubt poses new challenges to the practitioners and tax authorities in Nigeria. It cannot be gainsaid that a lot of challenges are facing legal regulations and taxation of electronic commerce in Nigeria.8

  • Okorodudu M (1991), Analysis of Federal and State Taxing Powers: In Akanle O.(ed)Tax Law and TaxAdministration in Nigeria, Nigerian Institute of Advanced Legal Studies, Lagos p 49
  • Oladunjoye O. (1991), Tax Administration; The Problems of Assessment and Collection: In Akanle O. (ed) Tax Law and Tax Administration in Nigeria, Nigerian Institute of Advanced Legal Studies, Lagos p
  • Parts 1,11 and 111 of the Schedule to the Taxes and Levies (Approved List Collection) Act, Cap T2 LFN 2004.
  • Indigbe A (2010), Legal and Institutional Framework for E-Commerce in Nigeriapunuka.com/uploads/cbn-paper-on-legal-institution-framework-for-e-commerce-in-Nigeria (Accessed 7/09/2015)
  • Ariyoosu D (2012), An Examination of the Legal Regulations and Taxation of Telecommunications andElectronic Commerce in Nigeria; https//www.unilorin-edu.ng.draduate these/law/law-ch-2012-ariyoosu.pdf. (Accessed 7/09/2015) P 260
  • Ibid p 262

The various tax authorities in Nigeria9 are grappling with the challenges of tax collection on electronic commerce. The Tax legislations in Nigeria have not been amended to accommodate the trend of transaction brought by the Information and Communication Technology (ICT). One of such challenges posed by application of ICT to commerce or e-transactions is tracking transaction for the purposes of taxation.10

The drive towards growing non-oil revenue (through fiscal optimization) and eliminating leakages are not mutually exclusive objectives.11 Thus, the process of diversifying the revenue base on the economy can only be further complemented by the choices the Federation makes to arrest leakages from the digital economy.12 The challenges with e-commerce is numerous on the ground that the need for physical presence is removed or at best diminished and this creates the problem of how to determine the right to tax profits that are derived from electronic commerce. Then a further question is whether a website or a server owned or used by a foreign company can create a fixed place of business and hence a taxable transaction?13Electronic commerce is still in its infancy.14 And there is dearth of direct legislations on e-commerce and their virtual natures have made it difficult for the government to establish the real and acceptable mechanism of taxing e-commerce.15Therefore there is a need for a research in this area in order to know the effect of e-commerce on taxation of taxable incomes as provided by our laws.

1.2         Statement of Problem

  • The Federal Inland Revenue Service at the Federal; The State Board of Internal Revenue at the state level.
  • Faitai F. et al, Why Should Tax be on digital Flight from Nigeria? deloitte.com/ng/en/pages/tax/articles/inside-tax-articles/why-should-tax-be-on-digital (Accessed on 7/09/2015)
  • Ibid p1
  • Ibid p2
  • Bolaji O.(2009), Findings from Review of Laws for Social and Economic Development in Nigeria (paper presented at the Working Session of SPFPEL at the Nigeria Bar Association Annual General Conference on Tuesday August 18, 2009 at Ocean view Expo-centre, Eko Hotels & suites, Victoria Island, Lagos (Nigeria). Quoted in Ariyoosu D. Op cit P 300
  • Ariyoosu D. Op Cit p300
  • Ibid p300

There are many challenges with the taxation of E-commerce in Nigeria and as such the problems to be discussed in this study includes:

  1. Many trading entities engaging in e-commerce, especially multinationals operate as virtual organizations with little or no physical presence in any particular jurisdiction which could have determined the country having jurisdiction to impose tax on them.
  2. The traditional commercial laws, some of which are derived from the common law of England are still the major laws regulating commercial transaction and this of course cannot cope with the modern system of commercial transaction.
  3. Those who engage in electronic commerce device all means to avoid and evade payment of tax since their identity cannot easily be ascertained and assessment of their taxable    profits derived from e-commerce cannot be made.
  4. Electronic commerce being a modern way of commercial transaction requires technical skills for appropriate taxation which the bodies saddled with the responsibilities of collecting taxes in Nigeria are lacking.
  5. Taxes and Levies (Approved List of Collection) Act clearly spells out what are subject to taxes by each tax authorities. This of course relates to tangible products and not digital product which is a vital aspect of electronic commerce.

The natural consequence of the problems posed by electronic commerce is huge revenue loss to the government. A government without adequate revenue cannot adequately protect life and properties and where security of lives and properties cannot be guaranteed, life is bound to be brutish, nasty and short. Thus the questions are:

  1. Whether Nigeria is losing huge revenue as a result of the trading entities engaged in e-commerce operating as virtual organisation with little or no physical presence in a particular jurisdiction?
  2. Whether various tax laws in Nigeria make adequate provision for taxing e-commerce and whether various tax authorities have the necessary machineries for proper taxation of e-commerce?
  3. Whether e-commerce by its very nature, is not a veritable avenue for tax avoidance or evasion despite various laws designed to prevent tax evasion and avoidance?
  4. Whether there the tax authorities in Nigeria have the technical skill required in taxation of electronic commerce?
  5. Is there a need to develop new norms and tenets of interpretation to determine the nature and character of income from cross-border commercial transaction?

1.3.        The Aim and Objectives of Study

The main aim of this study is to examine the legal issues confronting taxation of electronic commerce in Nigeria. There are varying degrees of challenges with taxation of e-commerce such as tax avoidance and tax evasion, multiple taxation and even application of the present tax legislation to electronic transaction. Therefore, the main objectives of this research are as follows:

  1. To solve the problem of revenue loss posed by trading entities doing business across jurisdiction with little or no physical presence in a particular place.
  2. To point out the loopholes in Nigeria law relating to taxation with a view to suggesting way forward that will have impact on the way of conduct of electronic transaction and tax collection in Nigeria.
  3. To point out why e-commerce is an avenue for tax evasion and avoidance and to suggest how the tax authorities can block tax evasion and avoidance
  4. To point out why the tax authorities are ineffective and unable to brace up to the challenges posed by electronic commerce to tax collection in Nigeria.
  5. To examine the applicability of our tax legislations to digital products as same is a vital aspect of electronic commerce.

For the above stated objectives to be achieved the work will examine the laws regulating commercial transactions and taxation, observations of scholars and practitioners shall be used as the basis of analysing the suggested solutions to be raised in this work. The work therefore focuses on answering the questions raised in the statement of problem in order to proffer solution to the problems associated with taxation of e-commerce.

1.4. Justification of Study

This research is necessary at this moment especially with the drop in oil price which has been the backbone of Nigerian economy, and the fact that the Federal Government is now looking beyond oil revenue to grow the economy. The research no doubt will further the knowledge of tax authorities and administrator on how to block leakages in revenue generation occasioned by emergence of electronic commerce.

The research will benefit the government in that the application of the knowledge and recommendations in the work will drastically reduce short fall in the revenue accrued to the government from taxation of profits derived from commercial transactions.

The research will be of utmost importance to all stakeholders involved in the making of tax legislation and the bodies or agencies involved in the administration of tax in Nigeria. It will be of utmost importance to the Federal Inland Revenue Service, The State Board of Internal Revenue in coming up with policies and regulations which will be viable tools in curbing tax evasion and avoidance as a result of electronic commerce.

1.5. Scope and Limitations of the Research

There is no gainsaying the fact that this research takes place in Nigeria and as such geographically, the scope of this work is Nigeria. The work will examine the nature, workability of taxation of electronic commerce in Nigeria. However, the world is a global village. Consequently, reference is bound to be made to other jurisdictions.

This research is bound to take into consideration mainly the position of the Nigerian law on taxation of electronic commerce especially as the world is grappling with the fall in oil price and desire of the government to look beyond oil revenue to grow the economy. The work is limited to regulatory regime for taxation of electronic commerce in Nigeria because taxation is vital to income generation of Nigeria as a nation and taxes are matters of statutes.

1.6. Research Methodology

A legal research of this nature requires a doctrinal research methodology. The doctrinal research methodology employed in this work therefore involves the primary and the secondary sources of law. The primary source includes the constitution of the Federal Republic of Nigeria, 1999 (As Amended), statutes and various statutory instruments both in Nigeria and outside Nigeria and case laws relating to the topic of this work.

With regard to secondary sources, these include textbooks, journals, seminar papers, theses, internet materials, conference papers, newspaper reports and because of the novelty of e-commerce in Nigeria, internet source shall mainly be relied on.

1.7. Literature Review

There are few literatures on the subject matter because of its novelty and few or no law governing e-commerce. This is not to say that there are no enough legislation on taxation generally in Nigeria as the issue of tax is purely statutory. It is taxation of e-commerce, being the focus of this work that there are few literatures.

Scholars and academics have published works in the field commerce. Several works have also been published in the area of taxation. However there are few literatures in the area of electronic commerce taxation due to its novelty.

Different writers have written textbooks, articles both in local and international journals on taxation generally. However, their writings do not address challenges to the taxation of electronic commerce in Nigeria.

Ayua,16 opines that the Nigerian Legal System offers an investor three form of business organization. These are the sole proprietor, partnership and corporate body with or without limited liability. However, his work did not address taxation of the income these business organization derived from electronic commerce.

Okauru,17wrote that tax policy can only be described as successful when it leads to effective tax administration, that such tax policy recognizes that sufficient and accurate information is the major requirement needed for effective and efficient tax administration which is not always voluntarily provided by tax payers. However, he did not go further to discuss how tax authorities can have this information even without being supplied by the taxpayers. The information about the payer who gets their taxable income from electronic transaction was not discussed in his work.

Ladan,18 wrote on cyber law and policy on information and communications technology in Nigeria and ECOWAS. His work is limited to the laws regulating information and communication technology and the institutions of government saddled with the responsibility of ensuring compliance with ICT law in Nigeria. Apart from reference he

  • Ayua I (1996), Nigerian Tax Law, Spectrum Law Publishing Lagos, p. 93

17Okauru I (2012),Federal Inland Revenue Services and Taxation Reforms in Democratic Nigeria, Safari Books Ltd, Ibadan, p 87

  • Ladan M. T. (2015) , Cyberlaw and Policy on Information and Communications Technology in Nigeriaand ECOWAS, Ahmadu Bello University Press Limited, Zaria, p 108

made to the Electronic Commerce (Provision of Legal Recognition) Bill 2008, how electronic commerce can be taxed is not discussed in his work.

Adesola19, wrote on taxation of income of professional and vocation, how professional receives fees, salary or wages as their reward in the course of their profession and as such, such fees, salary or rewards are subject to tax. He however did not address the fact that many of these professionals can be practicing without any physical office. That is, some are practicing their profession through internet.

Layede.20 wrote on Capital Transfer Tax. He posited that for Capital Transfer Tax Act to be effective, there must be identification of the property, tracing of the property, valuation of the property and exaction of the tax thereon. However, his position is limited only to tangible properties whereas it is possible to inherit or transfer electronic transaction to another person.

Abdulahi,21wrote on taxation of multinational companies. The multinational companies he referred to are those that have physical presence in more than one jurisdiction. He however, did not explain how those that carry on electronic transactions can be taxed

Adeoye22 opines that the government imposing tax on whom it is to be imposed must be having a thing in common particularly there must be a link between the government and the payer by which the government will have authority on the payer and the payer will accept authority of the government imposing the tax. He did not however explain to what extent

  • Adesola S (1986), Income Tax Law and Administration in Nigeria 2nd Edition, University of Ife Press Ltd, Ife, p 98
  • Layade P(1991), Towards An Administrable Capital Transfer Tax:InAkande O.(ed) Tax Law and TaxAdministration in Nigeria; Nigeria Institute of Advanced Legal Studies, Lagos p. 194
  • Abdulahi I (1991), Tax Treatment of Business concerns with International connections. In Akanle O. (ed) Tax Law and Tax Administration in Nigeria. Nigeria Institute of Advanced Legal Studies, Lagos p.
  • Adeoye O (2008), Significance of Taxation in a Nation. Journal of Private and Commercial Law; Faculty of Law, University of Ado-Ekiti, Vol. 1, p 1

does a government exercise the authority on the payer in the course of their electronic transaction since it is carried out within the cyberspace.

Abdularazaq,23wrote on the discretion of the judiciary in the construction of tax statutes. He is of the view that the incidence of tax avoidance just like its twin factor, tax evasion, is rampant in Nigeria, that the general trend which can be discerned is a conscious judicial side -tracking on technical grounds. His position however does not envisage electronic commerce which harbours potential for perpetual tax avoidance and tax evasion unless there is a strong legal and institutional framework.

Mohammed,24wrote on the legal formwork for operation of E-Commerce. In his work, various laws having connection with commercial transaction were made reference to. According to him, internet and e-commerce are verifiable tools for rapid development of the Nigeria economy. However, how the e-commerce which he submitted is a veritable tool for rapid development can be taxed is not discussed in his work.

Isallah25 wrote on the slow pace of computerization and poor internet connectivity as a challenge to the Federal Inland Revenue Service. His work does not cover how the income generated from electronic commerce can be assessed and taxed.

Oyemumi26 wrote on the ICT Revolution and Commercial Sectors in Nigeria in which he discussed the legal validity of the contract concluded on line, the validity of ICT related commercial transactions, their admissibility in evidence, and the issues of conflict of law where those commercial transaction are carried out between person who are connected to

23Abdularazaq ( 2001), Judicial Discretion and the Interpretation of Taxing Statues in Nigeria. In Nigeria Journal of Private and Commercial Law, Faculty of Law, Olabisi Onabanjo University , Ago Iwoye, OsunState Vol., p. 366

24Mohammed N (2014), Analysis of the Legal Framework for the Operation of E-Commerce: A NigeriaPerspective, Ahmadu Bello University Journal of Private and Comparative Law, Zaria, Vo. 6 & 7 p. 275 Isallah H (2014), The challenges of Nigeria Federal Inland Revenue Service in Tax Revenue Collection. Nigeria Journal of Tax Studies, FIRS, Abuja, Vol. 2 No. p 87

26Oyewumi A (2012), The FCT Revolution and Commercial Sectors in Nigeria: Impacts and LegalIntervention, University of Ibadan Law Journal Vol. 2 No. 1, p 206

different countries. His work however falls short of discussion on how the ICT related commercial transaction can be taxed.

Orifowomo27 discussed electronic commerce and electronic banking and went on to discuss various forms of e-banking which includes telephone banking and PC Banking. However, his work does not cover taxation of electronic commerce.

Adedokum,28 wrote that technological advancement, particularly and communication technology, (ICT) has made it possible for a tax payer to transact substantial business activities and make huge profits in many countries on-line without necessarily having some contact with the taxing jurisdiction of those countries. His work does not address how these tax payers that do online business can be taxed.

Sanni,29 wrote on taxing power of the Federal, State and Local Government. However, his research does not cover how this taxing power can be exercised on electronic commerce in so far as electronic commerce is not limited by geographical location.

Ariyoosu,30 wrote on legal regulations and taxation of telecommunications and electronic commerce, he argued that since e-commerce is imminent in meeting Global Standard in Business transaction, a new tax regime is necessary31. He did not however discussed about how the tax authorities can effectively administer tax in such a manner that profits gained from e-commerce can be taxed.

27Orifowomo O (2003–2005), The Challenges of Electronic Banking in Nigeria: An Opinion. Ahmadu Bello University Journal of Commercial Law Vol. 2 No. 1, p.159

28Adedokun K (2010–2011), The Exercise of Jurisdiction Taxing Powers and the Dynamics of ElectronicCommerce in Nigeria. Legal Perspective. Ahmadu Bello University Journal of Private and Comparative Law, Zaria Vol. 4 & 5, p 52

29Sanni A (2001), Issues in Local Government Taxation in Nigeria. Nigeria Journal of Private and Commercial Law, Faculty of Law, Olabisi Onabanjo University , Ago Iwoye, Osun State Vol. 2 p. 329.

  • Ariyoosu D. An Examination of the Legal Regulation and Taxation of Telecommunication and Electronic Commerce in Nigeria. https//www.unilorin-edu.ng.draduate these/law/law-ch-2012-ariyoosu.pdf. (Accessed 7/09/2015)
  • Ibid p 260

Charls32 wrote on the prospects of E-commerce Implementation in Nigeria. According to him, E-Commerce offers a level playing ground for large business as well as small-scale enterprises (SMEs) to operate in the global market-place. His work is limited to how e-commerce thrives and the place of e-commerce in the global market. How the large and small scale businesses involving in e-commerce can be taxed is not addressed in his work.

Opara,33 wrote on tax challenges of E-commerce in Nigeria. According to him, e-commerce is a significant way to revenue leakages. This leakage is from e-commerce at the assessment stage where the tax payers are either not assessed at all or they are improperly assessed.34 His work however does not proffer any solution to the challenge of revenue leakage occasioned by electronic commerce.

Shahriari,35wrote on the advantages of E-commerce and opined that e-commerce will benefit organizations, customers and the society at large. However how the society will benefit from e-commerce through tax was not discussed in his work.

Azam,36 wrote on e-commerce taxation and cyberspace law. His work centres on international response to international taxation of e-commerce. National response to taxation of e-commerce was however not discussed in his work.

Joe and Efiok37 wrote on impediments of electronic commerce as a tax revenue facilitator in Nigeria, their work however is limited to the legal impediments the identified.

  • Charles A, The Prospects of E-Commerce Implementation in Nigeria. arraydev.com/commerce/JIBC/2006-12/Ayo-E-Commerce.asp (Accessed 22/9/2015)
  • Opara L, Tax Challenges of E-Commerce in Nigeria: The Panacea for Legal Jurisprudence. eajournals.org/wp-content/uploads/tax-challenges-of-E-Commerce-in-Nigeria-the-panacea-for-legal-jurisprudence.pdf (Accessed 22/09/2015)
  • Ibid p 3
  • Shahriari S et al (2015), E-Commerce and it Impacts on Global Trend and Market. International Journal of Research, Granthaalayah Vol.3 P4. Also Available at http://www.granthaalayah.com (Accessed 25/4/16)
  • Azam R (2007), E-Commerce Taxation and Cyberspace. Virginal Journal of Law and Technology, Vol 12 No.2, Virgina P2 Also Available at http://www.vjoit.net (Accessed 20/4/16)

David38 wrote on old and new issues in the taxation of electronic commerce. His work centres on the sources based taxation, that electronic commerce should be taxed by the country in which the enterprise earns its income. However, the nature of e-commerce is such that cannot be fixed to a particular jurisdiction.

Shivani wrote that the e-commerce raises tax administration problems, to him e-commerce brings with it a paperless environment, hence, many traders may not be issuing paper invoices and transactions may not be traceable.39 He opines that in e-commerce compliance checking and monitoring of transaction are made too complex for a taxation authority to handle. He however, did not address how electronic transaction can be changeable to tax. He merely wrote about the challenges of taxing electronic commerce without more.

Emiko,40in his article ―An analysis of Federal/State Taxing Powers analysed the taxing power of the Federal and the states government tracing their jurisdiction to collect tax from 1951 constitution. He however did not cover their power of taxation of electronic commerce which is the focus of this work.

The limitation in all the works and cases referred to forms the basis of discourse in this dissertation and this work provides a comprehensive material in relation to taxation and electronic commerce as far as Nigerian experience is concerned. The works of authors and scholars both local and foreign mentioned are either with no implications on Nigerian situation or they are only aspects of taxation or e-commerce.

  • Joe D et al (2013), Impediments of Electronic Commerce as a Tax Revenue Facilitator in Nigeria. Journal of International Business Research, Vol.6 No.6, Canada. p153 Also Available at ccsnet.org/ibr (Accessed 23/4/16)
  • David F, Old and New Issues in the Taxation of Electronic Commerce, Berkeley Technology Law Journal, Vol.14 Issue2. Also Available on http://scholarship.law.berkeley.edu./btlj (Accessed 22/4/2016)
  • Shivani H (2014), Challenges of Value Added Tax on International E-commerce in Electronic Goods andServices in Kenya, Research Journal of Finance and Accounting ISSN2222-1697 (paper) ISSN 2222-2847 No. 7, 2014 also available In www.iiste org(Accessed on 7/9/15)
  • Emiko G (1991), An Analysis of Federal/State Taxing Powers: In Akanle O. (ed) Tax Law and TaxAdministration in Nigeria, Nigeria institute of Advance Legal Studies, Lagos p. 12

1.8. Organizational Layout

This research is made up of five chapters. Chapter one commences with the general introduction. This segment includes the background of the research, research problem, alms and objectives of the research, scope of research and research methodology. It also includes literature review, justification of study and organizational layout.

Chapter two focuses on conceptual clarification. This includes the concept of E-Commerce, the concept of taxation, taxable income and the concept of cyberspace, cyber jurisdiction, internet and cyber taxation.

The focus of chapter three is on the legal regulation of companies and individuals engaging in electronic commerce. It also includes tax administration in Nigeria and the international legal response to taxation of e-commerce, assessment of cyber income for tax purpose and the possibility of cyber taxation in Nigeria.

Chapter four deals with the challenges to taxation pose by electronic commerce. This of course includes challenge of infrastructures, lack of skill needed in taxation of electronic commerce; cyber jurisdictional problem, the issue of residence as a basis for tax and electronic commerce will be discussed under this chapter. Tax avoidance and evasion, high and double taxation, challenge of assessment and computation tax of electronic commerce will be x-rayed.

Chapter five concludes this work as it collates the work in a succinct form with the aim of addressing the objectives of this dissertation. In consists conclusion, findings and recommendations

AN ANALYSIS OF REGULATORY REGIMES FOR THE TAXATION OF ELECTRONIC COMMERCE IN NIGERIA

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