EFFECT OF TAX DIGITALISATION ON ECONOMIC GROWTH IN NIGERIA

Authors

Obioma Obiageli Ajaero Department of Accountancy, Alvan Ikoku Federal University of Education, Owerri, Nigeria
Theresa Chidinma Okoro Department of Accountancy, Alvan Ikoku Federal University of Education, Owerri, Nigeria
Stella Ngozi Okoroafor Department of Accountancy, Alvan Ikoku Federal University of Education, Owerri, Nigeria
Andrew Anaele Agbiogwu Department of Accountancy, Alvan Ikoku Federal University of Education, Owerri, Nigeria

Tax Digitalisation, Company Income Tax, Value Added Tax, Economic Growth, Nigeria

The study examined the effect of tax digitalisation on economic growth in Nigeria,

specifically analysing Company Income Tax (CIT) and Value Added Tax (VAT) from 2010 to

2023. Adopting ex-post facto design, the study investigated whether digitalization introduced

significant changes in the relationship between tax variables of CIT and VAT and RGDP in

Nigeria. Secondary data were obtained from online published statistical data of the Federal Inland

Revenue Service (FIRS) and the Central Bank of Nigeria (CBN) Bulletin for the period. Using

Ordinary Least Squares (OLS) regression and the Chow test, we compare the pre-digitalisation

period (2010-2016) with the post-digitalisation period (2017-2023). The OLS regression model

estimated the effect of CIT and VAT on RGDP, while the Chow test assessed the statistical

significance of structural changes in the relationship between the tax variables and RGDP over the

two periods. Findings revealed that while CIT’s effect on RGDP remained largely unchanged post-

digitalisation, VAT had a significant positive effect on RGDP post-digitalisation. The study

recommended that the FIRS should utilise digital tools to capture, monitor, and audit all registered

companies for tax purposes. This will widen the tax base and increase corporate income tax

revenue in Nigeria.