TAXATION BARRIERS, POLICY RESPONSES AND TAX COMPLIANCE IN NIGERIA'S INFORMAL DIGITAL ECONOMY

Abstract

This study examined taxation barriers within Nigeria’s informal digital economy and evaluated policy responses aimed at improving tax compliance and revenue generation. A survey research design was adopted, and the population comprised 4,668 staff of the Nigerian Revenue Service. A sample size of 368 respondents was determined using the Taro Yamane formula, and a snowball sampling technique was employed to select participants. Primary data were collected using a structured questionnaire rated on a five point Likert scale, while hypotheses were tested using Spearman’s Rank Order Correlation Coefficient. The findings showed that: taxation barriers have a significant negative relationship with tax compliance in Nigeria’s informal digital economy (rho = -0.735, p = 0.000); existing policy measures have a very weak positive relationship with tax compliance, and this relationship is not statistically significant (rho = 0.033, p = 0.560). In conclusion, strengthening digital tax systems and addressing institutional constraints are essential for improving revenue generation in Nigeria’s informal digital economy. The study recommended that the Nigerian Revenue Service should strengthen data integration systems by linking digital transaction platforms, identity databases, and tax records in real time to reduce existing gaps that weaken compliance in the informal digital economy. This will improve visibility of digital economic activities and support more accurate tax administration across online businesses and freelancers.