Authors:
Paul Oluwaseun Mathias
Addresses:
Department of Banking and Finance, Olabisi Onabanjo University, Ago-Iwoye, Ogun, Nigeria.
Abstract:
This study investigates the relationship between business taxation and government revenue in the context of the evolving digital economy. Utilising secondary data from published literature covering 32 years from 1990 to 2022, the study employs an ex-post facto research design to assess long-term patterns and causal correlations. The paper findings indicate that web-based payments (WEB) have a markedly adverse effect on government revenue, implying that the rise in digital transactions may diminish conventional taxable activities or introduce deficiencies in current tax structures. On the other hand, corporate income tax (CIT) has a positive and statistically significant influence on government revenue, indicating that it remains important for fiscal sustainability. The paper shows that about 0.03% of any long-term imbalance between corporation tax, web payments, and government revenue is fixed each year. This means that the process of getting back to equilibrium is slow but steady. These results have significant implications for policymakers, underscoring the need to align digital payment systems with current tax frameworks. As economies become increasingly digital, governments must establish tax laws that are flexible enough to prevent revenue leakage while also fostering innovation and digital growth. To ensure steady and long-lasting revenue production in the digital age, we need to strike a balance between expanding digital financial systems and enhancing corporate tax administration.
Keywords: Corporate Tax; Government Revenue; Digital Economy; Web Payment; Company Income Tax; Vector Error Correction Model; Ex-Post Facto Research Design; Ordinary Least Squares.
Received: 02/10/2024, Revised: 05/12/2024, Accepted: 25/01/2025, Published: 07/06/2025
DOI: 10.64091/ATITP.2025.000154
AVE Trends in Intelligent Technoprise Letters, 2025 Vol. 2 No. 2 , Pages: 94-109