Taxation of Digital Services in a Globalized Economy: Implications for Nigeria and Africa

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@article{1710538,
      author = {Uzor Chijioke Esq.},
      title = {Taxation of Digital Services in a Globalized Economy: Implications for Nigeria and Africa},
      journal = {Iconic Research And Engineering Journals},
      year = {2025},
      volume = {9},
      number = {3},
      pages = {685-698},
      issn = {2456-8880},
      url = {https://www.irejournals.com/formatedpaper/1710538.pdf},
      abstract = {The pace of digitalization of the world's economy has exposed the flaw of traditional international tax systems, particularly digital services. Multinational technology companies more and more make huge revenues across borders without physical presence, which creates severe challenges for states to exert taxing powers. This paper critically examines taxation of digital services in a global economy, notably Nigeria and Africa. Based on comparative and doctrinal analysis, the study canvasses international tax principles, OECD/G20 Inclusive Framework proposals, United Nations negotiations, and African national tax reforms. Evidence highlights that while unilateral measures such as Digital Services Taxes (DSTs) and Significant Economic Presence (SEP) regulations are lucrative in terms of short-term budgetary gains, they may also carry the risk of administrative inefficiency, double taxation, and potential disagreement in trade. Nigeria's new reforms, including the VAT imposition on non-resident digital providers and SEP actions, are important policy developments that are in the course of implementation but are hampered by the shortcoming of weak administrative capacity and deficit in compliance. Across Africa, similar experiences demonstrate a delicate balance between generating revenue and promoting digital innovation. Tenuously structured levies, such as mobile money, have in some cases jettisoned financial inclusion, demonstrating the risk of unilateral dependence. The report explains that solutions in the long term lie in enhancing domestic enforcement capacity, cooperating more robustly at the regional level through bodies like ECOWAS and the African Union, and engaging more intensively in multilateral tax talks. Lastly, the article argues that a balanced strategy?based on VAT reforms, collection at the platform level, harmonization of regional policy, and positive participation in global arrangements?has the best potential avenue for African countries. These initiatives can bring more equitable revenue sharing, protect digital inclusion, and more seamlessly integrate Africa into the new international tax architecture.},
      keywords = {Digital Services Tax, Globalization, International Taxation, Africa, OECD},
      month = {September},
      doi = {https://doi.org/10.64388/IREV9I3-1710538-079}
  }