LEGAL IMPLICATIONS OF VALUE ADDED TAX ON ELECTRONIC COMMERCE TRANSACTIONS IN NIGERIA

Abstract

The fast-growing e-commerce sector in Nigeria has significantly changed how businesses operate, offering new opportunities for digital trade while also presenting challenges to the traditional tax system. As more transactions move online, the process of applying and enforcing Value Added Tax (VAT) in this digital environment has become more complicated and subject to legal debate. The paper adopts a doctrinal methodology by examining existing statutes, case laws, and relevant scholarly literature on the topic. It highlights legal questions such as limits on tax jurisdiction, unclear definitions of digital services, the burden of compliance for non-resident suppliers, among other issues. The article makes several recommendations, including clearer laws and consistent tax rules for digital transactions. While Nigeria has made notable progress in updating its VAT system to align with the digital economy, additional changes are necessary. Creating a fair system that encourages economic growth while ensuring tax revenues are protected is vital for effectively managing e-commerce activities in Nigeria.