Tax Implications of E-Commerce in Nigeria

The definition of E-Commerce or E-Tailing is replacing the traditional relationship of buying and selling in person or the phone with the use of the Internet, Smart Phones and networking. The more people that use the Internet regularly, the more Internet commerce increases. This causes a continual loop of improvements and innovations of which businesses must be aware. Most economists see e-commerce as a market segment that leads to intensive price competition and consumers armed with greater knowledge. E-commerce has changed business models globally, and allows customers to engage in the process of shopping either online or to a destination. Brick and mortar stores do have a conundrum do you want traffic into the store, or do you want the sale based on ease of shopping and/or convenience? (Eisingerich).

There is also confusion regarding what is Constitutionally acceptable in the online marketplace. Many consumers and businesses believed that taxing products over the Internet was not allowed. . This misconception was cleared up in infamous Quill Corp. v. North Dakota case, which created the “nexus” law. This case has greatly effected the taxation of Internet sales. It stated that there must be a large physical presence of a company in a state for that state to lawfully require the company to collect taxes inside the state (Andes & Atkinson, 2013). With the growth of the Internet, many of these misconceptions are attempting to be understood through various forms of legislation.

I am choosing to do my Business Analysis paper on e-commerce. I will explain the importance of it as well as the effects on the global economy. I will discuss the advantages of telecommunications and information technologies in a business versus those businesses without e-commerce. I will also discuss the marketing strategies involved with e-commerce and how it helps businesses. Due to the global nature of internet business, electronic commerce (e-commerce) standards have become a priority on the national and international level. While most traditional businesses are subject to local, state, and national

Electronic commerce has been there for a long time now, and it is a practice that is practiced by peoples from Germany, France, and the US on a daily basis. Since its inception around 40 years ago, e-commerce has continued to grow as innovations, technologies and a lot of business reverting to the use of the e-commerce. The aspect of buying and selling of goods in the early 1960s was sluggish with the traditional way of mailing of documents being replaced with the Electronic Data Interchange (EDI), which would later pave a way to the electronic commerce. After the e-commerce, however, the practice was not more reliable as it still had many challenges (Tsolis, 2009). For instance, it was not easy for buyers to see products from the comfort of their homes and more so, the methods of accessing the information were limited.

E-commerce has indeed revolutionized the world, and some of its benefits include access 24-hour operations, providing access to a global market, the removal of the middleman, provides a level playing field, reduces marketing costs,

E-commerce a new term in the world economy emerged with the spread of the internal in the early nineties of the twentieth century , but some researchers have pointed to the existence of the seventies of the last century through the exchange of electronic information between industrial companies systems.E-commerce is considered one of modern idioms and taken to enter our daily lives until they became used in many life activities, which are of link information technology revolution and communications. E-commerce expression can divide it into two sections, with the first, a “trade”, which refers to the economic activity is through the trading of goods and services between the governments, institutions and individuals and is governed by a number of rules and regulations could be argued that an internationally.

Concerns have been expressed that e-commerce could result in base erosion and profit shifting [BEPS]. Consumption taxes are levied on the principle of taxation at the place of consumption and according to rates set in individual country or state. E-commerce, however, has the potential to undermine the application of domestic and national tax rules. Tax planning for an e-business differs from tax planning for a traditional bricks and mortar company. In the past, generation of income depended on the physical presence of assets and activities. This physical presence, permanent

There are always new opportunities to build our rapidly changing market economy that leaves no one behind. Markets use these opportunities to create an atmosphere of ambition between individuals to exceed one another and in turn generate a more dynamic, self sufficient economy. However, leading more toward a market economy there are greater responsibilities held on many retailer’s shoulders. The market place has grown so much that it is not just actual “professionals” exchanging/selling goods and services to consumers, but also people that are not necessarily a professional in a business through online markets. When discussing about online markets, many sellers use the advantage of the internet to increase revenues. We use online markets mainly to benefit both the buyer and seller in many ways. One specific benefit that they both find very favorable to them is the fact that there is no sales tax involved in the transactions made in certain online market systems. Amazon, E-bay, and other retailer websites that operate under this certain online market system do not collect sales taxes from customers. The only reason for the exemption of collecting and remitting of sales tax to the state in which they execute a sale in, is that they do not have a physical presence “nexus” in states where they sell their product to their online customers. This starts to become an issue to traditional businesses that have to collect and remit sales taxes to the state and also the state itself.

The presence of competition in the indirect tax within the export and import zones leads to the creation of horizontal tax externalities. Vertical tax externalities may also arise between the central and regional government. In most of the cases, both countries tend to maximize revenue through tax collection through purchasing and selling of goods. One party may therefore set policies that aim at in increasing tax collection (Lucas 369; & Ballard and Lee 720). Besides, an understanding cultivates from their works that the government may also balance the availability of

Recently, the tax treatment of Internet commerce has generated considerable attention. Sales and use taxes account for more than 30 percent of state tax revenues. Sales tax authority can only require a business

The table below is the U.S. Census Bureaus reports a sharp increase in the retail E-commerce sales as a percent of total quarterly retail sales since the first quarter of 2006 to the last quarter of 2015. E-commerce sales in 2015 accounted for 7.3 percent of total sales, which is 0.9 percent higher than what it accounted in 2014. The explosive growth of E-commerce transactions greatly affects the revenue of sales taxes and has made whether to levy taxes on Internet sales a hot debate. From the consumers’, online retailers’, and technology companies’ position, imposing sales tax on Internet sales will somehow limit the growth of both E-commerce and the Internet usage. From the side of brick-and-mortar retailers and the government body, tax

CHAPTER 9 TAXATION OF INTERNATIONAL TRANSACTIONS SOLUTIONS TO PROBLEM MATERIALS | | | | |Status: | Q/P | |Question/ |Learning | | |Present |in Prior | |Problem |Objective |Topic | |Edition |Edition | | | | | | | | | | | 1 LO 1 Worldwide income Unchanged 1 2 LO 1 Worldwide

revenues via e-commerce in the next two to three years (Richter, 48). The core of e-

1. Abstract 2. International tax law & its sources 3. Brief history of International Tax Law 4. Who gets the pie? 5. Arm 's length principle : Cornerstone of International Tax Law 6. Transfer pricing methods 7. Problems with of source taxation of MNE 's 8. Internet & e-commerce : Achilles heel of current International taxation regime? 9. Formulary Apportionment (FA) 10. Existing uses of Formulary Apportionment systems in the world 11. Developing countries & Formulary Apportionment 12. Critique of Formulary Apportionment 13. Transfer pricing and Formulary Apportionment : One continuum 14. Conclusion 15. Acknowledgements 16. References

A main issue in tax design in different economies over current decades has been whether countries should be encouraged to move away from trade-based taxes, such as tariffs towards more broadly-based consumption taxes, such as VAT and excise. It has generally been the stance taken by World Bank country missions advises on tax policy [15].