Nigeria to tax crypto & digital assets at 10% on capital gains, experts React

Former Nigerian President Muhammadu Buhari introduced the Finance Act, 2023, into law on the eve of his departure from office on the 28 May, 2023. The act brings in tax reforms to update the country's financial system, including a new 10 percent tax on profits made from selling digital assets like cryptocurrencies. The comprehensive legislation seeks to enhance monetary transparency, boost revenue generation, and promote economic growth. Recognising the increasing importance of digital assets, the act aims to impose a tax on cryptocurrencies.

Nigeria's new tax legislation on digital assets

By implementing the new tax law, the Nigerian government seeks to create a level playing field to ensure digital asset holders contribute their share of tax for the nation’s development. This shows Nigeria’s recognition of the growing influence and economic potential of digital assets while ensuring the tax system keeps up with the evolving financial landscape.

Experts divided on Nigeria’s crypto tax

Barnette Akomolafe, CEO of M7pay, shared with Cointelegraph that the new taxes signify a move towards acknowledging cryptocurrencies as legitimate assets and incorporating them within the established financial and regulatory structure. This development follows the Central Bank of Nigeria's previous ban on commercial banks providing services to crypto exchanges in February 2021.

A crypto expert, who chose to remain anonymous, expressed worries about the taxation of cryptocurrencies due to their unique features, including valuation, transaction tracking, and international complexities. They emphasised the need for governments to provide clear guidelines, education, and support to taxpayers. This viewpoint resonated with other crypto enthusiasts.

Just read that very soon you all will start paying taxes on your crypto and Forex profits in Nigeria.

10% of your capital gains goes to government 😳😳. What are we going to get in return?

— CryptoLord NE 📊📈 (@CryptoDefiLord) June 8, 2023

Governments often depend on the cooperation of crypto exchanges to track the capital gains of users. This collaboration enables authorities to access transaction data and identify individuals or entities for tax purposes.

However, the extent of cooperation and regulatory standards differ among countries. Some jurisdictions have stricter reporting requirements for exchanges, while others have limited regulations or are still in the process of developing them.