Former Nigerian President Muhammadu Buhari concluded his tenure on May 28 by signing the Finance Act 2023 into law. This significant legislation aims to modernize Nigeria’s fiscal framework through tax reforms. One notable provision introduced by this act is implementing a 10% tax on gains from the sale of digital assets, including cryptocurrencies.
The comprehensive nature of this law reflects Nigeria’s commitment to fiscal transparency, revenue generation, and economic growth. By imposing taxes on cryptocurrencies, the government seeks to establish a fair environment where digital asset holders contribute their share of taxes to the nation’s development. This move highlights Nigeria’s acknowledgment of digital assets’ increasing influence and economic potential while ensuring that the tax system aligns with the evolving financial landscape. To gain further insights into the response from the industry and community, Cointelegraph reached out to various stakeholders within the local crypto ecosystem.
Barnette Akomolafe, the CEO of M7pay, a crypto payments app, shared thoughts with Cointelegraph regarding the new tax regulations. According to Akomolafe, these taxes can be interpreted as a positive step toward recognizing cryptocurrencies as legitimate assets and integrating them into the existing financial and regulatory frameworks. It’s worth noting that the Central Bank of Nigeria had previously prohibited commercial banks from serving crypto exchanges in February 2021.
An anonymous local crypto expert highlighted the challenges associated with taxing cryptocurrencies due to their unique characteristics, such as valuation, transaction tracking, and international complexities. They emphasized the need for governments to establish clear guidelines and provide education and support to taxpayers. This viewpoint resonated with other crypto enthusiasts as well.
In many instances, governments rely on the cooperation of crypto exchanges operating within their jurisdictions to monitor users’ capital gains. By collaborating with these exchanges, authorities can access transaction data and identify individuals or entities for taxation purposes. However, the level of cooperation and specific regulations differ across countries. Some jurisdictions have implemented stringent requirements for exchanges to report user information, while others may still be developing such regulations.
The Finance Act of 2023 sets the stage for Nigeria to embrace the potential of digital assets while ensuring they are properly taxed. As the nation moves forward, it will be essential to balance regulation and innovation, providing clear guidance to stakeholders and fostering an environment conducive to the crypto industry’s growth.
