Nigerian government set to tax bitcoin and crypto transactions

[Zaguru12]

The government of Nigeria is set to place bitcoin and other crypto currencies on taxation, come next year. This is part of the country's finance bill 2022 set to be approved. The country's finance minister Ahmed Zainab discussed that the taxation will help regulate digital assets and enhance e-commerce growth.

Recall that the country's apex Bank placed a ban on transactions involving crypto currencies in February 2021. The ban lead to various other banks closing or freezing the accounts of people involved in crypto. The move lead to the current government falling out with the investors in the country.

Moreover, the ban didn't stop its citizens from trading in bitcoin . This has most of the time been done through the P2P transactions on exchanges. The continuous obsession on crypto lead the incumbent vice president to the idea that the country will be better off regulating it rather than banning.

April 2022 the country's security Exchange Commission pushed towards the move to its regulation, stating that a licenced virtual assets service provider must be secured any entity that wishes to run a crypto services within the country. The country has since witness the government leaning towards crypto currency. This has been shown by their partnership with Binance exchange in September this year. It has also offered scholarships to some selected citizens to study blockchain.

My doubts over this recent moves are:

1. Does this means the government is considering the adoption of bitcoin and other crypto currencies?

2. How has the other countries placed on crypto taxation faired so far?

3. Will its regulation helps speeds up its adoption by people within the country?


Benjamindad. Com

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[avikz]

My doubts over this recent moves are:

1. Does this means the government is considering the adoption of bitcoin and other crypto currencies?

May or May not be! This is a data gathering phase. Nigerian government wants to understand how many people uses cryptocurrency or what is the volume. Based on this data, they will forecast potential tax collection. If that amount excites the government, they will probably legally adopt it.

2. How has the other countries placed on crypto taxation faired so far?

In my country, it is scaring off people due to 30% direct taxation rate without any opportunity for writing off the losses.

3. Will its regulation helps speeds up its adoption by people within the country?

Depends on multiple factors! If the tax rate is low and there is a legal framework available, then it will help in adoption. Otherwise it will just scare people out of the market.

[Mate2237]

Benjamindad. Com

It is a very good move by the Nigerian Government but the objectives spelled out by the agency to adopt the digital currency is not favourable as for me or in my point of view. Nigerians government never and ever to create anything to provide jobs but for their personal gain. All those objectives are spelled out because of cryptocurrency then they are planning to heavily tax the bitcoiners that will be using their exchange platforms.then p2p will be the major transaction approach in the country.

[Eternad]

1. Does this means the government is considering the adoption of bitcoin and other crypto currencies?

Possibly, They are viewing Bitcoin as potential source of profit through tax in the long term which means Nigerian government has high hope on Bitcoin that it will be boom soon that can be interpret as they are open for Bitcoin adoption in general. They will not gonna waste time to create a law for regulating it if they are not open about it.

2. How has the other countries placed on crypto taxation faired so far?

Other countries charge insane tax especially those who shows disapproval on the Bitcoin adoption but most of the country has a normal tax percentage on crypto. In my country, Bitcoin still doesn’t have tax because our government doesn’t care about its existence.

3. Will its regulation helps speeds up its adoption by people within the country?

Speeds up adoption? It depends on how the government will promote Bitcoin when they finally charge taxes. I’m sure people will avoid investing on Bitcoin if the government charge insane amount of tax like what happened on India.

[stompix]

In my country, Bitcoin still doesn’t have tax because our government doesn’t care about its existence.

Just because crypto is not regulated by law it doesn't mean that the government can't force you to pay taxes on the profits you made, many have called for this, saying that the government doesn't care about coins and then wake up to find letters from the IRS equivalent, as the profit you make is still profit and profit is taxable everywhere.

1. Does this means the government is considering the adoption of bitcoin and other crypto currencies?
2. How has the other countries placed on crypto taxation faired so far?
3. Will its regulation helps speeds up its adoption by people within the country?

1. Tens of countries have established specific taxes on cryptocurrency gains yet are not moving an inch towards adoptions and have no plans on doing so.
2. It depends from county to country, in the ones where people pay their taxes they pay taxes on crypto gains also, in the ones where tax avoidance is a way of life and the citizens split their time between work and figuring way how not to pay of course it's not working that great. So it's impossible to have the same effect in Nigeria and in the US for example.
3. Nobody knows, n one extreme scenario it might actually drive a few to stop dealing with the moment the equivalent of the IRS there starts digging and inviting active traders to have a talk and take their money.

The best thing is to ask yourself what are you going to do, are you going to declare all profits down to a penny and pay all the taxes or not?
Ask a few friends and if the result is a unanimous NO, then this will of course have no effect whatsoever. And if the government sees that nobody pays, then it might restrict it even more.

[BlackHatCoiner]

Can someone clarify what it means to tax crypto transactions? As far as I can judge, government can't interfere in P2P transactions. Taxing the product isn't the same as taxing the transaction. There's obviously VAT, but it's paid whether you use cash, credit, or bitcoin. It doesn't make sense to collect more taxes from one currency than another; the medium of exchange the customer will use to the merchant is none of the government's business, as long as they pay the corresponded products' taxes.

[Poker Player]

Can someone clarify what it means to tax crypto transactions? As far as I can judge, government can't interfere in P2P transactions. Taxing the product isn't the same as taxing the transaction.

The thing is as simple as if you have Bitcoin that you have acquired at $16k and when you buy something the price is at $17k, the government will want to charge you capital gains tax. This apart from the VAT on the product or service in question.

This would be very cumbersome to control and would force people to carry some control software.

Imagine how difficult it is to control by hand that you have a bitcoin bought at various prices and you go and pay for a coffee, the supermarket, a meal, the bus, etc. with Bitcoin. At each time you pay the price would be different.

That is why many of us advocate the establishment of a minimum exemption, which at some point there has been talk that could be $200, below which there would be no legal obligation to report transactions, but I see it difficult, because when you buy a coffee you might not have to report it but the coffee shop does have to report each sale, and with the ever increasing collection eagerness of the various states I think it will come to nothing.

[glendall]

My doubts over this recent moves are:

1. Does this means the government is considering the adoption of bitcoin and other crypto currencies?

2. How has the other countries placed on crypto taxation faired so far?

3. Will its regulation helps speeds up its adoption by people within the country?

I don't think any government will adopt bitcoin, they only want the benefits of the bitcoin owners themselves, without thinking about the risks that the holders go through,
this is just my personal opinion, because in my country there is already a tax system and it applies when exchanging / trading, it's not too big but it's quite unfortunate this action, they want taxes but don't want to adopt bitcoin itself

[Antonas1]

1. Does this means the government is considering the adoption of bitcoin and other crypto currencies?

Since they're thinking about setting a tax rate for crypto-transactions, then of course that means they're thinking about adopting it regardless of whether it's Bitcoin or something else.

2. How has the other countries placed on crypto taxation faired so far?

Every country has different regulations about crypto-tax. You can search the list on Google.

3. Will its regulation helps speeds up its adoption by people within the country?

Depends on the rules. If you look at Lamido Yugda's statement on November 25 2022, it seems they haven't decided what will actually be implemented.

Yuguda told reporters in Lagos on Friday, November 25, 2022, that the Commission’s reason for not considering crypto is that crypto exchanges do not have access to the banking platform needed to drive their trades in Nigeria yet.

^{Source: Nigeria’s SEC will only consider “sensible digital assets” and not crypto, as it plans to improve trading in digital assets}

[BlackHatCoiner]

The thing is as simple as if you have Bitcoin that you have acquired at $16k and when you buy something the price is at $17k, the government will want to charge you capital gains tax.

In my place, unrealized gains aren't taxed; and they shouldn't. If I sell my bitcoin at $17k, which would have bought at $16k, then that should be trivial to tax, because I realized the gain. But if I never get back on fiat, then how exactly are they going to identify my gains?

Imagine how difficult it is to control by hand that you have a bitcoin bought at various prices and you go and pay for a coffee, the supermarket, a meal, the bus, etc. with Bitcoin. At each time you pay the price would be different.

My question remains; how can there be an intermediary involved in peer-to-peer transactions? In the same way they don't know I made a purchase with cash, they don't know I made that purchase with bitcoin.

[romero121]

Each and every country wants revenue out of the transactions. Different countries have imposed tax over the transactions, but haven't taken any stand on the legality of bitcoin within the country. Already more countries have begun to legalize bitcoin usage. The latest in the list is the Brazil.

Nigeria haven't taken any decision on the legality of bitcoin. Nigeria people are much into cryptocurrency usage. Among the African nations, Nigeria tops in usage. Understanding the increasing usage of cryptocurrency by the people, the government might've taken the decision to generate revenue through taxation.

[Poker Player]

In my place, unrealized gains aren't taxed; and they shouldn't. If I sell my bitcoin at $17k, which would have bought at $16k, then that should be trivial to tax, because I realized the gain. But if I never get back on fiat, then how exactly are they going to identify my gains?

Well, if you buy something in a store with Bitcoin, the store will be obliged to declare it, another thing is if with blockchain analysis they can know who you are. But the states want you to declare every sale to charge you capital gains in their case. If instead of $16k you bought at $1k they will want to tax you for almost everything you spend. Just think that the EU is planning to treat all transactions with KYC, but whether they could if it is approved in the end is another matter.
 
But I don't even know why I'm explaining this to you, since I think you know all about it. If what you are aiming at is an ideal world in which most transactions are done P2P and escape the state, as I think Satoshi conceived, I think that will never happen.

My question remains; how can there be an intermediary involved in peer-to-peer transactions? In the same way they don't know I made a purchase with cash, they don't know I made that purchase with bitcoin.

If you sell me something and I pay you in Bitcoin, there is no intermediary, but we must both legally declare the transaction. Another thing is that it is not done, as I think it is not done in many transactions today, but the states know that money and power is escaping them because of that and they have started to work on it.

[BlackHatCoiner]

Well, if you buy something in a store with Bitcoin, the store will be obliged to declare it

They're obliged to declare the purchase, but not the medium of exchange. Not at least in my place.

another thing is if with blockchain analysis they can know who you are.

Chain analysis can't do much for points of sale, because that is aimed to be settled off-chain.

Another thing is that it is not done, as I think it is not done in many transactions today, but the states know that money and power is escaping them because of that and they have started to work on it.

My understanding is this: you can't evade VAT, because you declare as a merchant what you import. It's trivial for a taxer who does a little analysis to figure out if you're evading VAT with cash transactions. But, I don't understand how he can figure out how many Bitcoin transactions you've done. How can he ensure you aren't lying to him? To put it this way: what can the government do if certain merchants decide to declare most (if not all) of their Bitcoin transactions as "cash transactions".

[Hispo]

My doubts over this recent moves are:

1. Does this means the government is considering the adoption of bitcoin and other crypto currencies?

2. How has the other countries placed on crypto taxation faired so far?

3. Will its regulation helps speeds up its adoption by people within the country?

I believe it does not mean they are planning towards some sort of official adoption anytime soon, actually this is just evidence of their failure to enforce a ban on Bitcoin in Nigeria (country where Bitcoin is widely adopted). In the perfect scenario of those people in the government, the e-Naira would have replaced Bitcoin completely in their country to the point nobody would use Bitcoin anymore, so they had no reason to tax transactions.

They realize they are dealing with something they can't touch, as politicians. Probably, this is some kind of measure to discourage Bitcoin adoption, considering how they have talked badly on Bitcoin before.

[8rch7]

Learned with my country have adopted set to taxes bitcoin transaction and most potential huge taxes income every month  I don't blame will allow by other country adopted tax for Bitcoin and all cryptocurrency transaction. Nigerian have huge potential with Bitcoin transaction and easy for their government get much passive income from Bitcoin tax. I don't know detail with Bitcoin have been legal transaction currency in Nigerian and set to tax for every transaction, comparison with my country Bitcoin still illegal payment currency but we have to pay tax for every transaction at local exchange market.

In my country have been 2% cut off for taxes paying each transaction when selling or buying cryptocurrency in local exchange market, beside we have to pay tax fees 2% each local currency deposit trough bank account.

[Smartvirus]

My doubts over this recent moves are:

1. Does this means the government is considering the adoption of bitcoin and other crypto currencies?

2. How has the other countries placed on crypto taxation faired so far?

3. Will its regulation helps speeds up its adoption by people within the country?


Benjamindad. Com

Channels TV

Nations of the world are rocking the boat of inflation and Nigeria is one of those many nations. Governments of the world aren't entirely enemies of cryptocurrency just with the fact that they don't like the idea but, its more of a regulation thing as government aren't cool with not being in control. Nigeria has become a big market in all grounds and with the current state of the national, its no surprise they are spreading there tentacles to where ever they might be able to generate funds to improve the economy of its nation.

Although, taxing cryptos is hardly an issue with Nigeria but the corrupt practices in its ranks is but, taxing it would be better than placing a ban. The result of the ban only shows an outrage participation and ensure more privacy in operating the network still.

[South Park]

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My doubts over this recent moves are:

1. Does this means the government is considering the adoption of bitcoin and other crypto currencies?

2. How has the other countries placed on crypto taxation faired so far?

3. Will its regulation helps speeds up its adoption by people within the country?

1. They care about the taxation and noting else, many governments have a love and hate relationship with this market, they like the potential profits they can get but they do not like they cannot fully bend this market to their will.

2. There is not a clear answer to this, I doubt Nigeria tax collection agency is as strong as the IRS so tax avoidance should be way easier there.

3. Probably not, people were trading cryptocurrencies at Nigeria despite the ban by the government, so I do not see traders being happy about this change on their stance.

[Zaguru12]

Nations of the world are rocking the boat of inflation and Nigeria is one of those many nations. Governments of the world aren't entirely enemies of cryptocurrency just with the fact that they don't like the idea but, its more of a regulation thing as government aren't cool with not being in control. Nigeria has become a big market in all grounds and with the current state of the national, its no surprise they are spreading there tentacles to where ever they might be able to generate funds to improve the economy of its nation.

Although, taxing cryptos is hardly an issue with Nigeria but the corrupt practices in its ranks is but, taxing it would be better than placing a ban. The result of the ban only shows an outrage participation and ensure more privacy in operating the network still.

Definitely I think the government agencies aren't comfortable with the credibility of bitcoin. Some of the shedy businesses they engage with banks will eventually stop people move to bitcoin. The devaluation of the local fiat against exchange currencies which is something bitcoin will address easily isn't preferred by some individuals in government since they benefit from it. Some people are also ill informed that it and thinks it will replace fiat. Which is very wrong.

Although I will prefer its regulation than banning but how will the do it.

Moreso I am quite delight that a country like Nigeria facing inflation or ending towards recession again is looking towards bitcoin. If at all isn't a political plot to just lure people to vote them

[Vaskiy]

In my country the give have taxed cryptocurrency as 30% and hasn't mentioned anything about its stand on the legality. People have come to a conclusion, anything that is being taxed is considered as acceptance. In this regard people are making use of cryptocurrencies.

On the other side the government have launched the CBDC which is under trails. The government wants the people to be under their control and keep away cryptocurrencies. Many measures have been taken, yet things aren't working as the expectancy of the government. It is the people who decide what to be done amidst the announcements.

[Zanab247]

Maybe the government want to use that strategy to know if government can also benefit from Bitcoin and cryptocurrency in the country before they can make it legal for the users to have full access to it. I guess, there are some countries that imposed tax to Bitcoin and cryptocurrency users in their countries but the users are not enjoying it like El Salvador country that made it free for their citizens. If the government will make it legal in the country by tax users , it will really help Nigeria government to tackle this high inflation that is affecting the country.