Nigerian Crypto Tax Implementation is Too Early, Local Experts Say
New Nigerian tax law on crypto profits faces hurdles, warns Blockchain Association head
Obinna Iwunna, the head of the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), says it will be difficult to enforce the new Finance Act, 2023. This law, which was approved on May 28, includes a tax on earnings from digital money like cryptocurrencies (Bitcoin and others).
The act was created to update the country's tax rules. One of its main changes is a 10% tax on profits made from selling digital assets, such as cryptocurrencies.
Iwunna stated that putting a 10% tax on cryptocurrencies right now is a mistake. He said it's like putting the cart before the horse because the Central Bank of Nigeria (CBN) still won't allow banks to handle cryptocurrency transactions.
He asked “how can you tax something that isn't officially recognized or defined”. He said it's necessary to clearly define what cryptocurrencies are and have the right support in place before you start taxing them. He also mentioned how Nigeria's National Information Technology Development Agency (NITDA) defined blockchain technology with the help of a national policy.
According to Iwunna, cryptocurrencies involve security, money, and technology. These three areas are overseen by the Nigerian Securities and Exchange Commission (SEC), the CBN, and NITDA, respectively. It is crucial to have a shared understanding of what cryptocurrency is. Then, the right laws, regulations, and taxes can be set up.
SIBAN has contacted the SEC and CBN about their worries and are waiting for a reply. Some talks have happened, but no firm decisions have been made yet.
Iwunna acknowledged that the government wants to increase its tax revenue. But he said it's important that these new taxes don't stop the growth of the cryptocurrency industry. He emphasized the need for clarity about the taxes and how they relate to the recognition of cryptocurrencies.
According to Iwunna, the new tax laws might not be accepted because the government didn't consult with the right people when they launched e-naira, a type of digital money. If they had worked together with the digital money community, the e-naira could have been more quickly and widely adopted.
