Ilamosi Ekenimoh



‘By 2020, brick and mortar retail spaces will be little more than showrooms.’ If your business isn’t on the internet, then your business will be out of business’. ‘The sooner we drop the ‘e’ out of ‘e-commerce’ and just call it commerce, the better.’ All of the above quotes mark the massive tech-revolution created by the internetworking of four computers to create the Internet. This essay seeks to examine in total the frame work that exists for the taxation of online businesses in Nigeria. The essay identifies the problems involved in taxing online businesses in Nigeria, defines the scope of online businesses and emphasizes the challenges all of them face in operation, registration and taxation, briefly discusses the existent laws in Nigeria on the subject matter, and finally proposes solutions to the aforementioned problems, and then some.





Nigeria is fast embracing the world as a global village with more than half of the country’s population- 101 million, registered as internet users within the country. The resultant effect is that many day-to-day activities, including trade and commerce are now conducted via the internet.

Businesses that are established and conducted online, usually do not follow the traditional business models; many don’t as a necessity require a license or registration to operate, thus effectively excluding them from the tax database (meaning they will not be taxed). Including them will cost the government a lot of time, and money, contrary to Adam Smiths’ principle of Effectiveness for taxation which posits that taxes be collected with the least amount of effort possible.

Taxation is largely presence/residence based, and many online businesses, depending on the perspective, either have no presence, or are multi-resident; touching more than one jurisdiction/territory. There is thus difficulty in identifying the state(s) or country (ies) with tax jurisdiction over electronically generated income. The resultant effect is the additional difficulty of the possibility of double taxation.

In the event that liability is to be imposed on online businesses for tax avoidance, and/or evasion, many of these businesses lack physical offices to be served notice of said liability, as they conduct business through virtual stores. It would thus be easy for online businesses to close-up-shop in order to avoid liability. If tax authorities attempted to still track such defaulters down, that would result in even more expenditure by government.


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N.B: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official  position of the African Academic Network on Internet Policy. 

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