The implementation of Nigeria's Finance Act 2023, which includes a provision for a 10% tax on gains from the disposal of digital assets, has been criticized by Obinna Iwuno, the president of the Blockchain Technology Stakeholders Association of Nigeria (SIBAN). uno believe that Enforcing the tax law will be challenging due to its premature introduction.
Iwuno expressed concerns about the 10% tax on cryptocurrencies in the current uncertain environment, particularly with the ongoing restriction by the Central Bank of Nigeria (CBN) on facilitating financial transactions involving cryptocurrencies. He questioned how something that is not recognized or defined, and cannot be processed by commercial banks, can be taxed. Iwuno emphasized the need for clarity and infrastructure support before imposing taxes.
Highlighting the efforts of the Nigerian National Information Technology Development Authority (NITDA) in defining blockchain technology through collaborative efforts and national policy development, Iwuno stressed the importance of a collective understanding of cryptocurrencies. He noted that cryptocurrencies involve security, currency, and technology, and are regulated by different entities such as the Nigerian Securities and Exchange Commission (SEC), CBN, and NITDA. Establishing a unified definition will enable policymakers to develop appropriate regulations and taxation measures.
Regarding engagement with the SEC and CBN, Iwuno confirmed that Nigerian cryptocurrency stakeholders have raised their concerns and are awaiting a response. While discussions have taken place, no firm decisions have been made yet. Iwuno emphasized the need for clarity on tax implications and their connection to the recognition of cryptocurrencies and related procedures.
Iwuno also pointed out that a lack of consultation, as observed during the rollout of the e-naira, could hinder the passage of tax laws. He suggested that if the e-naira is integrated with the digital asset ecosystem, it could see rapid adoption. by millions of Nigerians. It is crucial to strike a balance between broadening the tax base and ensuring that taxes do not hinder the growth of the cryptocurrency industry.
