The world’s most popular media company Facebook, creates no content. The world’s most popular retailer Ali Baba carries no stock, and the world’s largest accommodation provider, AirBnB, owns no property.

The above quote is as pertinent as it is trite. Straits Times notes that digitization has led to the emergence of new business models and increased international trade, while removing the need for a company to have physical presence in a country to conduct business with its residents.

It becomes essential to examine what can be taxed, who should be taxed, where and how much. A global approach is needed to adopt tax rules to the digitized economy. Therefore, the Organization for Economic Cooperation and Development (OECD) has committed itself to tweaking the world’s tax rules to catch up with this economy. It commenced the Base Erosion and Profit Shifting (BEPS) Project in 2012.

The Digital Economy

The digital economy is the worldwide network of economic activities, commercial transactions and professional interactions that are enabled by ICT. The technologies that fuel this economy have created a disruptive revolution within the past 20 years that have put rigid companies out of business and introduced new companies like Uber, Airbnb, Netflix and Spotify. The digital economy is worth three trillion dollars today. This equals six times the U.S.’ annual trade deficit and more than half the GDP of the UK.

Companies and Companies Income Tax

Companies are recognized as juristic persons in Nigeria and are mandated by the Companies Income Tax Act to pay 30% of the profit earned in the year preceding assessment. There are however two kinds of companies in this regard – resident and non-resident companies.

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