Former Nigerian President Muhammadu Buhari, just before leaving office on May 28, signed the Finance Act of 2023 into law. This groundbreaking legislation ushers in a series of tax reforms aimed at revitalizing Nigeria’s fiscal framework. Notably, it introduces a 10% tax on gains from the disposal of digital assets, including cryptocurrencies.
The primary objectives of this comprehensive legislation are threefold: to promote fiscal transparency, to bolster revenue generation, and to acknowledge cryptocurrencies as legitimate assets. The Nigerian government, cognizant of the rising significance of digital assets, has taken the proactive step of imposing taxes on cryptocurrencies.
By implementing this measure, the government seeks to foster a fair and equitable environment where digital asset holders contribute their due share of taxes to the nation’s development. This move underscores Nigeria’s acknowledgment of the growing influence and economic potential inherent in digital assets, while also ensuring that the tax system keeps pace with the ever-evolving financial landscape. To gain insight into how this new legislation is being received by the local crypto ecosystem, Cointelegraph approached several members of the industry and community for their perspectives.
Barnette Akomolafe, CEO of M7pay, a crypto payments app, highlighted the significance of the new taxes as a step toward recognizing cryptocurrencies as legitimate assets and integrating them seamlessly into the existing financial and regulatory framework. This development follows the Central Bank of Nigeria’s prohibition on commercial banks from servicing crypto exchanges in February 2021.
Just read that very soon you all will start paying taxes on your crypto and Forex profits in Nigeria.— CryptoLord NE 📊📈 (@CryptoDefiLord) June 8, 2023
10% of your capital gains goes to government 😳😳. What are we going to get in return?
An anonymous local crypto expert emphasized the challenges associated with taxing cryptocurrencies due to their unique nature, which encompasses aspects such as valuation, transaction tracking, and international complexities. They stressed the need for governments to establish clear guidelines and provide comprehensive education and support to taxpayers. Interestingly, this viewpoint found resonance among several crypto enthusiasts.
In many instances, governments rely on the cooperation of crypto exchanges operating within their jurisdictions to monitor users’ capital gains. By collaborating with exchanges, authorities can access transaction data and identify individuals or entities for tax purposes. However, the level of cooperation and specific regulations vary from one country to another. While some jurisdictions have imposed stringent requirements on exchanges to report user information, others may have limited regulations or are still in the process of formulating them.
Cointelegraph sought a response from Binance Africa but received no comment by the time of publication.