The Impact of E–Payment System on Tax Revenue in Nigeria

Abstract

Nigeria is experiencing a substantial digital transition, characterised by the growing use of electronic payment systems across all sectors of the economy. Comprehending the impact of these technological transformations on tax income is essential for policymakers and stakeholders. The purpose of this research is to examine how the rise of online payment systems has affected tax collection in Nigeria. Tax income in Nigeria was the intended target of this research, which aimed to assess the impact of three different payment mechanisms on that revenue: ATM, POS, and mobile application. An ex-post facto design was used in the investigation. For this study, we used a random selection of five companies—MTN Nigeria, eTranzact, Chams Plc, Courteville Business Solutions Plc, and Omatek Plc—to represent the population of all telecommunications companies listed on the Nigerian Stock Exchange as of 2023. It was decided how many samples to take using the judgemental sampling technique. As for the analytical method, it was the Auto Regressive Distributed Lag Model (ARDL). Tax income in Nigeria is significantly impacted by the three main payment systems—automated teller machine (ATM), point-of-sale (POS), and mobile application (MApp)—according to the study's results. The report advises the Nigerian government, in conjunction with financial institutions, to persist in promoting and incentivising the use of ATM payment systems and other digital payment platforms. The substantial influence of these systems on corporate income tax suggests that their broad implementation may improve tax compliance and revenue generation. The government must to consistently assess the influence of POS payment systems on tax income and modify policies accordingly. Ongoing assessment will guarantee that difficulties are immediately addressed, hence maintaining the favourable effect on tax income.