Tax Implications of E-Commerce in Nigeria

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ABSTRACT

This paper examines the Tax Implications of E-Commerce. The issue of e-commerce and its tax implications continues to receive a high level of attention because of the fast growth of e-commerce activities. In the emerging global economy, e-commerce has increasingly become a necessary component of business strategy and a strong catalyst for economic development. The integration of information and communications technology (ICT) in business has revolutionized relationships within organizations and those between and among organizations and individuals. Specifically, the use of ICT in business has enhanced productivity, encouraged greater customer participation, and enabled mass customization, besides reducing costs. Even before the
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Countries might differ over where the presence of a facility, the location of customers, the passage of title or a number of other factors determines where the income arises. E-Commerce facilitates cross-border transactions and as a mechanism has particular relevance to international taxation.
Consequently according to Li, Jinyan(2003) while e-commerce might not introduce any new problems, it is apparent that any problem already associated with an inability to synchronize or inter-relate a variety of disparate taxing systems became exacerbated by a model that facilitates the very types of transactions that result in such problems in the first instance.
A fundamental change in existing tax rules does not appear to be requisite. However internet and e-commerce has increased the need for efficient and equitable tax treatments of firms operating in multiple tax jurisdictions. Current procedure used by most countries to allocate the tax base between jurisdictions and to avoid double taxation through a network of more than 1,500 bilateral double taxation treaties, is not only cumbersome, but will also come under increasing pressure as the scope and volume of cross border activities expand sharply. This is because the double taxation treaties are based on the assumption of national sovereignty in tax policy, which will become less relevant as globalization progresses. Most discussions with respect to
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