Tax Compliance, Digital Taxation, and Revenue Generation in Nigeria: An Empirical Analysis of E-Commerce Sector

The growth of e-commerce in Nigeria has significantly reshaped the digital economy, new revenue opportunities while presenting challenges for tax compliance and enforcement. This study investigates the link between tax compliance, digital taxation, and revenue generation in Nigeria’s e-commerce sector. Relying on secondary data from government reports and financial records, the study employs an Ordinary Least Squares (OLS) regression model to evaluate the impact of digital taxation on revenue mobilization. Key factors considered include tax compliance levels, enforcement strategies, and macroeconomic conditions. Results reveal that while initiatives like VAT on digital services have boosted revenue, tax compliance remains weak due to limited enforcement, low taxpayer awareness, and ineffective digital monitoring systems. Additionally, economic variables such as inflation and currency instability negatively affect tax revenue performance. The study underscores the urgent need for a stronger digital tax infrastructure to improve compliance and collection. It recommends enhanced public awareness campaigns, advanced technological tools for enforcement, appointing e-commerce platforms as tax agents, and automating tax processes. Implementing a more efficient digital taxation framework will enable Nigeria to optimize revenue from the digital sector, ensuring a fairer and more resilient tax system that aligns with the dynamics of the modern digital economy.