Nigeria Moves to Tax Cryptocurrency Trading and Digital Assets

The Federal Government of Nigeria is set to amend regulations to enable the taxation of cryptocurrency trading and digital assets. This initiative aligns with President Bola Tinubu’s administration’s broader strategy to boost revenue generation.

SEC’s Regulatory Approach

The Nigerian Securities and Exchange Commission (SEC) is developing new rules to ensure that all eligible transactions on regulated exchanges fall under the formal tax framework. In response to inquiries from Bloomberg, the SEC acknowledged the potential for substantial tax revenue from cryptocurrency transactions but has not provided an estimated projection of expected earnings.

Additionally, a bill establishing a legal framework for taxing cryptocurrency and other levies is currently under legislative review and is expected to be passed within the quarter. As part of this regulatory expansion, the SEC also plans to extend crypto licensing to centralized exchanges, improving oversight and taxation mechanisms. “We anticipate a gradual shift toward centralized exchanges as they provide greater investor protection and confidence,” the SEC noted.

Government’s Fiscal Reforms and Crypto Taxation

Recognizing the rapid growth of digital assets, the Tinubu administration sees an opportunity to increase tax revenue while enhancing regulatory oversight. Since taking office in 2023, the government has introduced several fiscal reforms to broaden the tax base and reduce the deficit.

Notably, before leaving office, former President Muhammadu Buhari signed the Finance Act 2023 into law, implementing key tax reforms, including a 10% tax on gains from the disposal of digital assets. This move acknowledges the economic impact of cryptocurrencies and ensures they contribute to national development.

By bringing digital assets into the tax net, Nigeria aims to foster innovation, enhance regulatory compliance, and align its tax system with the evolving financial landscape.