Taxation as a Tool of Enhancing Economic Growth in Nigeria
Keywords:
Digital economy, cross-border trade, Taxation, Real gross domestic product, Economic growth
Abstract
This study examined the effect of taxation on economic growth in Nigeria. The ex-post-facto research design was employed. The study sampled firms who pay their taxes to the FIRS in the thirty-six (36) states of the Federation and Federal Capital Territory, Abuja for the period covering 1995-2021. Secondary source of data collection method was used to harvest data from the Central Bank of Nigeria (CBN) Annual Statistical Bulletin and the Federal Inland Revenue Services (IFRS) Annual Report respectively. The Autoregressive Distributed Lags (ARDL) technique was adopted in the data analysis. The study findings indicated that withholding taxes and value added taxes obtained from the digital economy have significant effect on economic growth in Nigeria. Conversely, Company Income Tax (CIT) with respect to the digital economy has no significant effect on economic growth in Nigeria. However, a significant degree of relationship exists between digital economy tax variables and real gross domestic product of Nigeria. The study recommends that government may need to pay more attention to tax leakages in digital economy by embracing the current shift in economic activities through continuous training of tax officials. There is also the need for effective reforms in the Nigeria tax system, with focus on digital economy and economic transformation in Nigeria. Lastly, authorities need to obviate the complexity of the various components of taxes when making tax policies concerning taxation in Nigeria, given that the various tax components perform differently
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2. Aguolu, O. (2010). Tax reform in Nigeria: unrealized expectations. Bulletin for International Taxation. 64(1), 61-7.
3. Arowoshegbe, A. O., Uniamikogbo, E., and Aighenohuwa, O. O. (2017). Tax revenue and economic growth of Nigeria. Scholars Journal of Economics, Business and Management, 4(10), 696-702.
4. Asika, N. (2006). Research methodology in the behavioral sciences. Lagos: Longman Publishers.
5. Ihenyen, C. J., Mieseigha, E. G. (2014). Taxation as an instrument of economic growth: The Nigerian perspective. Information and Knowledge Management, 4(12), 49-53.
6. Institute of Chartered Accountants of Nigeria (2020). Taxation of digital economy. Advanced taxation study pack. VI publishers, Lagos. www.ican-ngr.org
7. Institute of Chartered Accountants of Nigeria (2020). Base Erosion and Profit Shifting. Advance Taxation Study Pack, VI publishers, Lagos. www.ican-ngr.org
8. Cockfield, A. (2006).The rise of the OECD as informal 'World Tax Organization' through national responses to e-commerce tax challenges. Yale Journal of Law and Technology, 8 (1).
9. Akinola, F. (2017). The economic performance of budget deficit in Nigeria. Research Journal of Finance and Accounting, 8(8). available online at https://core.ac.uk/download/pdf/234632005.pdf
10. Aliu, G. (2021). The digital economy and the tax landscape: examining the evolutionary trends of law and policy in Nigeria. UNILAG Law Review, 4(2). available online at https://unilaglawreview.org/wp-content/uploads/2021/02/Article5.pdf
11. Olbert, M., and Spengel, C. (2017). International taxation in the digital economy: Challenge Accepted? World Tax Journal.
12. ACTION 1: 2015 final report addressing the tax challenges of the digital economy”, OECD/G20 base erosion and profit shifting project. available online at https://www.oecd ilibrary.org/docserver/9789264241046en.pdf?expires=1626029291&id=id&accname=guest&checksum=165D2DB5AEA58137F639BE1E1B604DB6
13. Addressing the tax challenges of the digital economy, introduction to tax challenges of the digital economy, OECD library, 2014.
14. Available Online At Https://Www.Oecd-Ilibrary.Org/Docserver/9789264218789-4-En.Pdf?expires=1623145852&id=id&accname=guest&checksum=5418E9A4FB0CDF2648A2BAEFED2FD1FE
15. Addressing the tax challenges of the digitalisation of the economy – policy note, oecd/g20 base erosion and profit shifting project, January, 2019, available online https://www.oecd.org/tax/beps/policy-note-beps-inclusive-framework-addressing-tax- challenges-digitalisation.pdf
16. Members of the OECD/G20 inclusive framework on BEPS joining the statement on a two– pillar solution to address the tax challenges arising from the digitalisation of the economy as of 9 July 2021, available online at https://www.oecd.org/tax/beps/oecd-g20-inclusive- framework-members-joining-statement-on-two-pillar-solution-to-address-tax-challenges-arising-from-digitalisation-july-2021.pdf
17. OECD (2020).Tax challenges arising from digitalisation – report on pillar two blueprints: inclusive framework on BEPS, OECD/g20 base erosion and profit shifting project. OECD Publishing, Paris, https://doi.org/10.1787/abb4c3d1-en
18. Organization for Economic Cooperation and Development. (OECD, 2017). Articles of the model convention with respect to taxes on income and on capital”, available at https://read.oecd-ilibrary.org/taxation/model-tax-convention-on-income-and-on-capital-condensed-version 2017_mtc_cond-2017-en#page5
19. Bouncing back: Nigeria economic sustainability plan, 2020, available online at https://www.budgetoffice.gov.ng/index.php/nigeria-economic-sustainability plan?task=document.viewdoc&id=819
20. Buhari govt to impose heavy tax on Facebook, Twitter, other tech companies in Nigeria”, Daily Post, 27 June 2021, available online at https://dailypost.ng/2021/06/27/buhari-govt-to-impose-heavy-tax-on-facebook-twitter-other-tech-companies-in-nigeria-osinbajo/
21. Establishment of non-resident persons’ tax office, FIRS public notice, available online at https://assets.kpmg/content/dam/kpmg/ng/pdf/tax/firs-public-notice-on-the- establishment-of-non-resident-persons-tax-office.pdf
22. Masekesa, F. (2021). Nigeria, South Africa and Kenya dominate the e-commerce industry in SubSaharan Africa. The Asian Banker, available online at https://www.theasianbanker.com/updates-and-articles/nigeria,-south-africa-and-kenya-dominate-the-e-commerce-industry-in-sub-saharan-africa
23. Nigeria Fiscal Guide (2021). KPMG, March, 2021, available online at https://assets.kpmg/content/dam/kpmg/ng/pdf/tax/nigeria-fiscal-guide-2021.pdf
24. Nigeria’s Finance Act 2020: Insights series and sector analysis, available online at https://www.pwc.com/ng/en/assets/pdf/nigeria-finance-act-2020-insights-series-and-sector analysis.pdf
25. Olayemi, A., and Oluwajobi, V. (2017). Taxing the Nigerian digital economy, available at https://www.lexology.com/library/detail.aspx?g=05a34a67-f49b-4674-9b73-3f7e9fc0004b
26. What Nigeria's signing of the OECD's multilateral instrument means for taxpayers, PWC transfer pricing series, November 2017, available online at https://www.pwc.com/ng/en/assets/pdf/implications-of-oecd-mli.pdf
27. Odimma, S. (2020). Finance bill and the clarity paradox. Nigerian Tax Journal. available at https://assets.kpmg/content/dam/kpmg/ng/pdf/tax/nigerian-tax-journal-2020.pdf
Published
2022-10-19
How to Cite
Ogbonna, U. G., Emmanuel , U., & Peace Ngozi, O.-I. (2022). Taxation as a Tool of Enhancing Economic Growth in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 3(10), 109-125. https://doi.org/10.51699/cajitmf.v3i10.330
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