Value Added Tax (VAT) has become a major source of income in many developing countries, such as Nigeria. In sub-Saharan Africa, for example, VAT has been introduced in the Republic of Benin, Côte d’Ivoire, Guinea, Kenya, Madagascar, Mauritius, the Republic of Niger, Senegal and Togo. The facts suggest that in these countries, VAT has become a significant contributor to the total tax revenue of governments. (Ajakaiye 2000) the Value Added Tax Decree was established in 1993 and imposed in 1994. Value Added Tax (VAT) is an ideal form of taxation in the Nigerian tax system and has largely contributed to the mobilization of resources. as well as capital formation for the economy. This has a positive and significant impact on income mobilization in Nigeria; He also has a positive relationship with consumption.

A tax is a financial burden or other privilege imposed on a taxpayer (natural or legal person) by a State or the functional equivalent of a State, such that non-payment, fraud or resistance to collection are punishable by: law Taxes are also imposed by many administrative divisions. Taxes are direct or indirect taxes and can be paid in cash or work equivalent. The taxation of any economy and the growth of the government’s economic policy depend on the revenue generated by the tax authorities. In Nigeria, the federal treasury has the legal mandate to impose taxes on their citizenship and legal person in the public and private sectors of the economy. Tax authorities now have autonomy to assess, collect and register taxes. This favorable environment that has emerged on the basis of (Section 8 (q) of the FIRS Establishment Law 2007) has led to an improvement of the tax administration in the country.

E-commerce refers to the use of communication technologies, particularly the Internet, to buy, sell and market goods and services to customers or end-users. The Internet has caused a fundamental shift in national economies isolated from each other by barriers to cross-border trade and investment; isolated by distance, time zones and language; and isolated by the national difference in government regulations, culture and ethnic trade systems. E-commerce provides a level playing field for large companies as well as small and medium-sized enterprises (SMEs) in the global marketplace; and for businesses and regional communities to participate in social, economic and cultural networks without problems across international boundaries (Mary-Anne, 1998).

All large companies incur administrative costs when remitting customers’ revenues to suppliers of goods or services purchased. Taxes are not different. Resources collected from the public through taxes are always greater than the amount that can be used by the government. Nigeria’s National Tax Policy (NTP) defines as one of the main objectives the elimination of bottlenecks and leaks in the Nigerian tax system. Therefore, it requires tax authorities (state, federal and local) to identify all possible sources of leaks in the Nigerian tax system and to minimize or eliminate such leaks. It is recognized that revenue loss occurs in three stages, namely, evaluation, collection and use.


The trend with technology is that new patterns of business interaction develop as companies and consumers participate in an increasingly virtual or electronic marketplace and reap the benefits. New technologies have made it possible to pay for goods and services through the Internet and, in many cases, replace the need to manage physical money. However, the advent of electronic commerce as a result of the development of the Internet has given rise to a series of legal and socio-economic problems. Despite its promises, the problem is that the Internet does not have clear and fixed geographical transit lines that traditionally characterize the physical trade of goods and services. It is in this context that we should try to provide an overview of the legal framework of regulation, legal problems and prospects for the development of electronic commerce in Nigeria.

Nigeria is transforming into information technology and information technology, its laws are not yet well adapted to this transition. Laws should not only be applicable to electronic commerce innovations, but should also be proportional to the legal evolution of electronic business and consumer protection. Given the aforementioned problems in which online or online commerce exists, the profits of this electronic commerce are not reflected in our income speeches unless they are subject to taxes. Electronic commerce generally refers to commercial activities based on the processing and transaction of digitized data, including text, sound and visual images, which ultimately result in an exchange of value in telecommunications networks. In general, it is perceived as the purchase and sale of products or services through electronic systems such as the Internet and other computer networks. The products are sold, advertised, sold, paid and delivered through the services of a website through the Internet. By assessing its relevance, electronic commerce reduces the costs associated with marketing, customer service and the burden of operating infrastructure, increasing the amount of funds available for profit-making investments. E-commerce has remodeled the basics of commerce and has brought many benefits to people and businesses. Every day more and more goods and services are bought and sold online. In fact, some goods and services are bought and sold virtually online without any physical or material equivalent. In Nigeria, VAT is one of the instruments established by the federal government to generate additional income. However, most known Nigerians and interest groups have spoken out against its introduction. It seems that VAT poses some problems. For the purposes of this document, we will examine the impact of VAT on income generation in Nigeria and its impact on Nigeria’s economic growth.


This research work is set to answer the research question below.

1. What is the impact of VAT on E-commerce?


The following are the objectives of the study:

1. To know the impact of value added tax on E-commerce.


The following assumptions which are subject to testing are made for the purpose of this research work.

HO1: Online VAT has no Impact on E-commerce.


The study will assist the government in policy formulation as it relates to value added tax. It will also help to broaden the nation‟s revenue base thereby making it less dependent on oil export.

      1. This study will educate the stakeholders in the financial sector and the general public on the relationship between exchange rate fluctuation and value added tax and how both of them influence the E-commerce of Nigeria.
      2. This research will be a contribution to the body of literature in the area of the effect of personality trait on student’s academic performance, thereby constituting the empirical literature for future research in the subject area.


This study will cover the relationship between exchange rate fluctuation and value added tax and how the duo influence E-commerce in Nigeria.


Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work

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