Nigeria's Imposes 10% Tax on Digital Asset

On May 28, former Nigerian President Muhammadu Buhari enacted the Finance Act, 2023, prior to leaving office. This Act brings new tax reforms to modernize Nigeria's fiscal structure, with one key element being a 10% tax on profits from the sale of digital assets, including cryptocurrencies.

The comprehensive 2023 Finance Act is designed to enhance fiscal transparency, bolster revenue, and stimulate economic growth. Notably, it acknowledges the rising importance of digital assets by bringing them under the tax umbrella, aiming to level the playing field and allow these assets to contribute equitably to the nation's development. This move highlights Nigeria's intent to adapt its tax system to the changing financial environment. 

Local crypto industry reactions to the Act were obtained by Cointelegraph. Barnette Akomolafe from M7pay, a crypto exchange app, sees the taxation as a progressive step towards accepting cryptocurrencies as valid assets and integrating them within the existing financial regulations. This sentiment is notable given the Central Bank of Nigeria's previous ban on commercial banks serving crypto exchanges in February 2021. 

An anonymous local expert highlighted the potential difficulties of taxing cryptocurrencies due to their unique nature, such as determining valuation, tracking transactions, and handling international complexities. The expert stressed the need for clear governmental guidelines, educational support for taxpayers, and cooperation with crypto exchanges for successful implementation. Various governments require crypto exchanges to provide user transaction data for taxation purposes, but regulations differ from country to country. 

Binance Africa was approached for comments on the matter, but no response was obtained at the time of publication.