Analysis of Unilateral Digital Tax Measures in Developing and Emerging Economies Using Nigeria as a Case Study: Looking Beyond the "Digital Tax Extremes" in International Tax Law & Policy
Abstract
The emergence of digital businesses has disrupted corporate income tax rules in international tax law and policy, which are based on taxable physical presence within a jurisdiction. Digital businesses have little to no physical presence in source countries, which impedes the source countries’ ability to tax them. I argue that stakeholders recognize the need to establish new global rules for the allocation of taxing rights in a globalized and digitalized economy. The point of difference lies in the approaches proposed for achieving this required change. I argue that these proposals represent two unacceptable “digital tax extremes”: global consensus and unilateralism. Relying largely on the theories of neorealism in international relations and rational pragmatism, I contend that African developing countries need to look beyond the Digital Tax Extremes if they wish to succeed in their digital tax drive. I consequently propose an alternative digital tax model for developing and emerging economies.