Enforcement of the Nigerian VAT Law on E-commerce in the Regime of Cyber Space
CHAPTER ONE
Objective of the study
The objectives of the study are;
- To ascertain the effect of VAT law on e-commerce
- To ascertain the effect of cyber space on Nigeria economy
- To ascertain the challenges of cyberspace in Nigeria
CHAPTER TWO
THE CHALLENGES OF TAXING INTERNATIONAL E-COMMERCE INCOME
The international tax regime developed in the 1920s. In general, the regime recognizes two bases for tax jurisdiction.9 The first is source-based taxation, or territorial jurisdiction. In source-based taxation, the country has jurisdiction to tax income sourced to its territory. Source rules determine the source of the income for this purpose by distinguishing between different categories of income. Hence, income classification is the first step needed to apply source-based taxation. The justification for source taxation is that the source country has contributed infrastructure and other facilities in the income production process. From an economic point of view, source taxation may advance capital import neutrality (CIN).
The second basis for tax jurisdiction is residence, or personal jurisdiction. In residence-based taxation, the country has jurisdiction to tax its residents on their worldwide income. In this system, the determination of residency for tax purposes is critical. The justification for residence-based tax jurisdiction stems from the contribution of the country of residence to the abilities of the income producer. It is alternatively justified by the social contract made between the members of the country and the governing body. From an economic point of view, residence-based taxation may advance capital export neutrality (CEN). These two bases of taxation sometimes lead to double taxation. The classic example of double taxation occurs when a resident of one country produces income in a different source country. A network of bilateral treaties based on model tax treaties has developed over time to prevent double taxation by allocating tax jurisdiction between the countries to the treaty based on different categories of income. According to the leading model treaty of the OECD, the jurisdiction to tax business income is given to the country that hosts the permanent establishment of the business. Permanent establishment is defined in Article of the OECD Model Tax Treaty to include a “fixed place of business through which the business of an enterprise is wholly or partly carried on.” The term “e-commerce” has several definitions. According to the U.N. definition, it includes “commercial activities conducted through an exchange of information generated, stored, or communicated by electronic, optic, or analogous means.” The U.S. Department of the Treasury defines it as “the ability to perform transactions involving the exchange of goods or services between two or more parties using electronic tools and techniques.” In this article, I define “e-commerce” as any commercial transaction conducted wholly or partly by using the Internet.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine enforcement of the Nigerian VAT Law on e-commerce in the regime of cyber space. CBN staff Abuja form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
TEST OF HYPOTHESIS
H0: there is no effect of VAT law on e-commerce.
H1: there is effect of VAT law on e-commerce.
H02: there are no challenges of cyberspace in Nigeria
H2: there are challenges of cyberspace in Nigeria
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain Enforcement of the Nigerian VAT Law on e-commerce in the regime of cyber space. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of enforcement of the Nigerian VAT Law on e-commerce in the regime of cyber space
Summary
This study was on enforcement of the Nigerian VAT Law on e-commerce in the regime of cyber space. Three objectives were raised which included: To ascertain the effect of VAT law on e-commerce, to ascertain the effect of cyber space on Nigeria economy and to ascertain the challenges of cyberspace in Nigeria. The study adopted a survey research design and conveniently enrolled 80 participants in the study. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from staffs of CBN in Abuja. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Electronic transaction is liable to tax particularly VAT in Nigeria. Where a non-resident company has no place of business in Nigeria, the administrative burden of registering in Nigeria ought not to apply. The reverse charge mechanism should be applied which only requires the VAT registered customer to account for the tax on supplies received from the foreign trader. When the reverse charge is applied, the recipient of the goods or services makes the declaration of both their purchase (input VAT) and supplier’s sale (output VAT) in their VAT return. International trade VAT is based on the destination principle, this means that exports are free of VAT and imports are taxed on the same basis and at the same rate as local production.
Recommendation
There should be building of a National Cyber Command Center that will be the go to center for cyber security in Nigeria. This will undoubtedly facilitate cyber intelligence
integration for all governmental parastatals and other institutions in Nigeria is desirable.
It is also recommended that there is a need to have Judges and Law Enforcement Officers that are technically and technologically sound in understanding cybercrime and its terminologies, appropriately interpreting the law on cybercrimes and keeping up with the trends of cyber environment.
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