RETHINKING TAXATION IN THE DIGITAL ECONOMY: GLOBAL DEVELOPMENTS AND NIGERIA’S POLICY RESPONSE

Abstract

Technology and digitalization have become an integral part of the world today. It is fundamentally transforming various aspects of human life and impacting different sectors, industries, and economies. This paper considers how the adoption of technology and digitalization has facilitated the rise of remote work, e-commerce, and digital platforms that connect individuals and businesses globally, fostering economic growth and globalization. The paper also considers how the digital economy has rapidly transformed the global economic order, presenting new challenges for existing system of taxation. The rise of digital technologies and online platforms has revolutionized business models, leading to increased cross-border transactions and the emergence of intangible assets as valuable sources of revenue. This has led to challenges faced by tax authorities in determining effective taxing strategies for the digital economy and has posed significant challenges for traditional tax frameworks. The digital economy makes it hard to track transactions and enforce tax compliance which has made tax imposition and collection a daunting task for tax authorities. This paper also aims to evaluate the taxation of the Nigerian digital economy in view of the Finance Acts 2019, 2020 and 2021. Therefore, this research will answer important questions such as the meaning and nature of the digital economy, the reason for taxing the digital economy, effort has been put in place all over the world for taxation of the digital economy, and Nigeria’s effort towards achieving effective taxation of the digital economy.