Former Nigerian President Muhammadu Buhari signed the Finance Act 2023 into law on the eve of leaving office on May 28.
The bill introduces a series of tax reforms aimed at modernizing the country's fiscal framework. One of the provisions is a 10% tax on gains from the disposal of digital assets, including cryptocurrencies.
The comprehensive legislation aims to increase fiscal transparency, increase revenues and boost economic growth. Recognizing the growing importance of digital assets, the bill seeks to tax cryptocurrencies. By doing so, the Nigerian government seeks to level the playing field to ensure digital asset holders contribute their share of tax revenue towards the development of the country. This demonstrates that Nigeria recognizes the growing influence and economic potential of digital assets, while ensuring that the tax system keeps pace with the changing financial landscape. The members of the local cryptocurrencyrency ecosystem to find out how the new legislation is being received by the industry and community.
Barnette Akomolafe, CEO of crypto payments app M7pay, told how the new tax can be seen as a step towards recognizing cryptocurrencies as legal assets and integrating them into existing financial and regulatory frameworks. Previously, the Central Bank of Nigeria banned commercial banks from servicing cryptocurrency exchanges in February 2021. Another local cryptocurrency expert, who did not want to be named, said taxing cryptocurrencies could be challenging due to the unique characteristics of digital assets, such as valuation, tracking transactions and international complexities. They added that the government must set clear guidelines and provide adequate education and support to taxpayers. This view seems to be supported by more crypto enthusiasts.
In many cases, governments do require the cooperation of cryptocurrency exchanges operating within their jurisdictions to track users' capital gains. By working with exchanges, authorities can access transaction data and identify individuals or entities for tax purposes. ever, the degree of cooperation and specific regulations vary from country to country. Some jurisdictions have implemented stricter requirements for exchanges to report user information, while other jurisdictions may have limited or ongoing regulations.
