Taxation Issue In A Digital Economy: An Overview And Perspective Of Selected Countries

Abstract

The study examines the taxation issues in the digital economy, focusing on the perspectives of India, the European Union (EU), the Organization for Economic Cooperation and Development (OECD) and Nigeria. This is to take a cursory look on the challenges and approaches adopted by these countries in addressing the complexities of taxing digital transactions and business models. The study employs a comprehensive literature review, analysis of policy documents, and examination of relevant reports to assess the taxation frameworks and initiatives implemented by India, the EU and OECD country. It explores the key concepts, theories, and practices underlying digital taxation and evaluates the impact of digitalization on traditional tax systems in these jurisdictions. In India, the introduction of the "significant economic presence" (SEP) concept and the implementation of the digital services tax (DST) have been significant steps toward taxing digital companies. The EU has pursued a digital services tax proposal, while the OECD has led international efforts through its BEPS 2.0 project to update tax rules for the digital economy. Nigeria has also made efforts to address digital taxation challenges, considering the rapid growth of the digital economy within its borders. The findings highlight the common challenges faced by these jurisdictions, such as the difficulty of "ring-fencing" the digital economy for tax purposes and the need for international cooperation. The study identifies potential solutions and offers recommendations for effective digital taxation strategies, including the importance of clarity in tax laws, the promotion of cross-border cooperation, and the adoption of technology-driven tax administration systems. This study contributes to understanding taxation issues in the digital economy from the perspectives of India, the EU, the OECD, and Nigeria. It is also beneficial to policymakers, tax authorities, and stakeholders in developing robust and adaptable tax frameworks that support the growth of the digital economy, ensure tax compliance, and foster sustainable revenue generation.