DIGITAL ECONOMY AND TAXATION: EMERGING TRENDS AND POLICY IMPLICATIONS FOR NIGERIA

Abstract

The traditional, brick-and-mortar economy is rapidly giving way to the digital economy, driven by the relentless march of technology. This trend presents exciting opportunities for entrepreneurs but also creates significant challenges for tax collection. In this new digital landscape, the old rules of the industrial-era economy no longer apply. Traditional business models, with their clear chains of production and distribution, are becoming less relevant. The digital economy is characterized by a more fluid and interconnected system, making it harder for tax authorities to track and tax economic activity. The paper examines the challenges posed by the digital economy, such as the difficulty of taxing intangible goods and services and the prevalence of non-resident companies operating within the Nigerian market. The journal also explores existing policy measures, including recent amendments to Nigeria's Finance Act, designed to capture tax revenue from the digital sector. By analyzing the strengths and weaknesses of these approaches, the research aims to identify effective policy recommendations for ensuring Nigeria benefits from the growth of its digital economy while fostering a fair and sustainable tax system. The paper suggested that feasibility of implementing new tax models tailored to the Nigerian context, such as digital transaction taxes or a digital services tax, should be evaluated.