Cryptocurrency in Nigeria: From ban to taxation

[sokani]

On the eve of his departure from office on May 28, former Nigerian President Muhammadu Buhari signed the Finance Act, 2023, into law. The act introduces a series of tax reforms aimed at modernizing the country’s fiscal framework. Among its provisions was the introduction of a 10% tax on gains from the disposal of digital assets, including cryptocurrencies.

In early 2021, CBN sent a memo to all commercial banks in the country to block the accounts of persons or establishments involved in crypto activities but with this bill passed into law it seems that the CBN ban of cryptocurrency is no longer effective since the government now wants a 10% taxation fee from the gain in cypto usage.

In many cases, governments do require the cooperation of crypto exchanges operating within their jurisdiction to track users’ capital gains. By working with exchanges, authorities can access transaction data and identify individuals or entities for tax purposes. However, the level of cooperation and specific regulations vary from country to country. Some jurisdictions have implemented stricter requirements for exchanges to report user information, while others may have limited regulations or are in the process of developing them.

Nigerian government can be successful with the new taxation law by having crypto platforms that are registered and operating in the country like Remitano, Luno, Roqqu, Bitmama, NairaEx etc. pay for their taxes but...Is this tax also applied to individuals using or trading cryptocurrency in these platforms? If yes... Do you think they will have any luck in taxing individuals using this platforms since we've not really had good results in collecting taxes from physical businesses? Also, most of these crypto merchants charges high transaction fees already and with the new law in place, can these platforms include a tax fee for every transactions without most users noticing?

Share your thoughts.
https://cointelegraph.com/news/nigeria-to-tax-crypto-digital-assets-10-on-capital-gains-experts-react/amp

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[Charles-Tim]

Nigerian government can be successful with the new taxation law by having crypto platforms that are registered and operating in the country like Patricia, Retimo, Luno etc. pay for their taxes but...Is this tax also applied to individuals using or trading cryptocurrency in these platforms?

Yes, but we need clear definition of how the tax is going to be collected. I guess people that trade or invest and make profit would be the ones to pay the tax after the net profit is positive.

But why mentioned Patricia? The exchange was hacked and their customers funds are still with the exchange up till now.

If yes... Do you think they will have any luck in taxing individuals using this platforms since we've not really had good results in collecting taxes from physical businesses?

There will always be tax evaders, it is also in developed countries, but maybe not as worse as it is in Nigeria. Introducing tax on crypto will be beneficial for the country is all I could think of.
 

Also, most of these crypto merchants charges high transaction fees already and with the new law in place, can these platforms include a tax fee for every transactions without most users noticing?

We need to know the regulatory framework about this. Is there one already? I do not have time to read about the Finance Act yet, but I think it is just an introduction of 10% tax for cryptocurrencies that is included yet for now.

https://pwcnigeria.typepad.com/files/2022-finance-bill_hor.pdf

[Doan9269]

Government are now just coming out straight on the interest of what they want with cryptocurrency, it's either they control it which is obviously impossible or they regulate it which will attract the payment of tax for every transactions performed, but two things remain unclear to me here, will the exchanges be the ones to be taxed or every individuals, secondly is that, will the government through this now allow the commercial banks to perform cryptocurrency transactions as against the ban made in 2021 considering the new administration.

[sokani]

Patricia? The exchange was hacked and their customers funds are still with the exchange up till now.

I'm aware they have issues and I only cited it as an example.

We need to know the regulatory framework about this. Is there one already? I do not have time to read about the Finance Act yet, but I think it is just an introduction of 10% tax for cryptocurrencies that is included yet for now.

Well... It's still a good thing that the government is gradually taking cryptocurrency seriously.

Government are now just coming out straight on the interest of what they want with cryptocurrency, it's either they control it which is obviously impossible or they regulate it which will attract the payment of tax for every transactions performed.

If it was a new administration that signed the financial act into law it would have been a different thing but since it's the same administration that allowed CBN to ban crypto activities in the country, all I can say is that maybe it's dawned on them that they cannot control the masses and they are beginning to look at the brighter side.

Will the government through this now allow the commercial banks to perform cryptocurrency transactions as against the ban made in 2021 considering the new administration.

I think so... Everything is still not glaring but in time we will get to know better.

[Agbe]

Local Digital Exchange platform will not work well in Nigeria even they tax them because Nigeria government will over tax them to the extent that they could not do well with the services. But the international exchange platforms are doing well so we also patronize them more the local exchange. Patricia is dead, and I have not hear of Luno exchange platform.
But all do same if they can do well with the exchange and tax dem nd di exchange go do like standard ones in the globe then there will no no issue

[Wiwo]

Government are now just coming out straight on the interest of what they want with cryptocurrency, it's either they control it which is obviously impossible or they regulate it which will attract the payment of tax for every transactions performed, but two things remain unclear to me here, will the exchanges be the ones to be taxed or every individuals, secondly is that, will the government through this now allow the commercial banks to perform cryptocurrency transactions as against the ban made in 2021 considering the new administration.

First since the creation of this thread I have gone into research to see the financial act and what it entails because I am sure cryptocurrency is not mentioned their in and I wanted to ask the ops to share a link to the information he posted, because nigeria as a country really need a special policy frame work dedicated to digital currencies inclusive of Decentrslized assets e.g Bitcoin ethereuem and other cryptocurrencies that operate within the blokchain technology and their remittance into the nigeria economy, other important point to note os that decetnrized cryptocurrencies their transactions are hard to trace and unless the holder use a centralized exchange platforms then his transaction can be traced and taxed, but aside from that he can invade tax as long as he continues to hold bitcoin just as an asset.

On the issue of banks and cryptocurrency transactions, I guess the misunderstanding came from the now suspended CBN governor, who introduced so many failed financial policy that most likely 90% failed e.g, the E-naira policy and the currency swap/ cashless policy scheme,  he is also the initiator of the bank vs cryptocurrency transaction ban, if not before the ban, the bank does not have any problem with cryptocurrency transaction and as a matter of fact, one can buy Bitcoin through union bank back then.

[Charles-Tim]

I'm aware they have issues and I only cited it as an example.

Which means it is not the right time to mention Patricia. The exchange is not functioning right now and the exchange hold customers funds, while we do not know if the exchange is going to pay it or not. I am surprised that you have not excluded the exchange.

First since the creation of this thread I have gone into research to see the financial act and what it entails because I am sure cryptocurrency is not mentioned their in and I wanted to ask the ops to share a link to the information he posted...

https://pwcnigeria.typepad.com/files/2022-finance-bill_hor.pdf



I just went through it as fast as possible, I have no time to read it in details yet, but I saw that cryptocurrencies are mentioned under chargeable assets.

[Wiwo]

Snip~

Hey mate, maybe you should have a deep read through the bill once again,  cryptocurrency or other digital assets are not mentioned in the bill and that is a clear indication that the bill will have to undergo a reform that will include cryptocurrency and other digital asset and decentralized assets like Bitcoin will be placed in the various categories.

All the same, I am not surprised why cryptocurrencies are not mentioned in the act after all this policy is a policy of the past administration whose central bank governor now suspended is gullible enough to believe that cryptocurrency is a threat to the government control of the financial sector, we're as he is now accused of terrorism financing which is the worst form of money laundering.

[Charles-Tim]

Hey mate, maybe you should have a deep read through the bill once again,  cryptocurrency or other digital assets are not mentioned in the bill

That is not correct.

Read what is in the image again or read it directly from the source. That is the source and it is 10% on capital gain which does not need to be included before we should know from how it is written.

[Wiwo]

Hey mate, maybe you should have a deep read through the bill once again,  cryptocurrency or other digital assets are not mentioned in the bill

You are wrong, read it again. That is the source and it is 10% on capital gain which does not need to be included before we should know that from how it is written.

Yeah mate sorry I just hard a reread now I guess my browser tab redirected me to a different policy I was reading earlier, that is why I made that assumption, I accepted my mistakes as I can see we're the inclusion of digital assets, after the column that contains capital gains tax and indeed cryptocurrency was mentioned there, I will edit my earlier comment to fir in the conversation, since this topic is going to trigger up a lot of discussions and regards to this policy analysis, since in concerned our primary topic of discussion here on bitcointalk, (cryptocurrency).

Bit I hope this policy will make provision for decentralized cryptocurrencies like bitcoin and I hope what the policy referred to as cryptocurrency is not CBDC like the e-naira and the rest.

[sokani]

ops to share a link to the information he posted

I already did at the bottom of my post.

Which means it is not the right time to mention Patricia[...] I am surprised that you have not excluded the exchange.

Actually, it's was one of the first local exchanges that crossed my mind when I was initially writing this topic... but I don comot am make peace dey 😃

[CryptopreneurBrainboss]

Nigerian government can be successful with the new taxation law by having crypto platforms that are registered and operating in the country like Remitano, Luno, Roqqu, Bitmama, NairaEx etc. pay for their taxes but...Is this tax also applied to individuals using or trading cryptocurrency in these platforms? If yes... Do you think they will have any luck in taxing individuals using this platforms since we've not really had good results in collecting taxes from physical businesses? Also, most of these crypto merchants charges high transaction fees already and with the new law in place, can these platforms include a tax fee for every transactions without most users noticing?

E easy to achieved na, first dem go demand everybody wey dey use the platform to complete KYC and the crypto platform go register under SEC. Belike self na why SEC dun give Binance Nigeria strike one to do fast come register under the SEC. Dem go fit tax us by making sure these platforms collect tax immediately we dey do withdrawal form the exchange. E just belike when you go chop for all this fancy restaurant them, usually if you look your bill wey you get, you go see the tax wey dem dey collect and e dey go government (nobi there pocket). Dem no go tell you about the extra tax until you dun chop finish although e no dey too cost.

The crypto platforms go just send alert to all their customers to inform them about the new laws and since e go dey everywhere we no go get choice but to just use the platforms like that and they pay the tax (but make we no fear as I believe e go be very small amount them). If be small percentage self for each withdrawal so poor man dey saved, na the rich dem go dey milk although e no go mean much to them too but I doubt we'll be able to reach this stages as e go mean Nigerian dun dey accept cryptocurency small small. All this one fit be talk talk matter, you know e no dey hard us as our government sabi talk more than dey do things.

[Franctoshi]

Nigerian government can be successful with the new taxation law by having crypto platforms that are registered and operating in the country like Remitano, Luno, Roqqu, Bitmama, NairaEx etc. pay for their taxes but...Is this tax also applied to individuals using or trading cryptocurrency in these platforms? If yes... Do you think they will have any luck in taxing individuals using this platforms since we've not really had good results in collecting taxes from physical businesses? Also, most of these crypto merchants charges high transaction fees already and with the new law in place, can these platforms include a tax fee for every transactions without most users noticing?

https://cointelegraph.com/news/nigeria-to-tax-crypto-digital-assets-10-on-capital-gains-experts-react/amp

It's even more difficult for government to tax people in the physical business than online because Nigeria already has data collection issues and that makes it difficult taxing physical business and thus we have a lot of tax invaders, but in the case of joining hands with these exchanges to tax crypto traders ,It will be easy for them to achieve their goal if they mean business and wants the crypto exchanges to cooperate, these exchanges already have existing datas of these individuals trading in their platforms through KYC registration process.
For instance ,They've had huge amount of success in taxing the mobile phone users in the country with the help of Network operators in the country like MTN and Airtel.

[Merit.s]

Finally, Nigeria government din see say them no fit stop crypto for we country na e make them come up with tax for crypto. Already we don dey inside the game,so if the new government serious for this matter,the way banks use dey pay task from customers transaction,I believe say na that same way den go tell this exchange them to operate. Na to pay the tax,if na wet in den want,so that we go fit dey do our transactions peacefully. But e no go easy for them too to execute this plans and begin benefit from am because Nigeria government no be talk na do government. Anyhow the exchange won use task us na less to us.

[Cryptomultiplier]

On the eve of his departure from office on May 28, former Nigerian President Muhammadu Buhari signed the Finance Act, 2023, into law. The act introduces a series of tax reforms aimed at modernizing the country’s fiscal framework. Among its provisions was the introduction of a 10% tax on gains from the disposal of digital assets, including cryptocurrencies.

In early 2021, CBN sent a memo to all commercial banks in the country to block the accounts of persons or establishments involved in crypto activities but with this bill passed into law it seems that the CBN ban of cryptocurrency is no longer effective since the government now wants a 10% taxation fee from the gain in cypto usage.

In many cases, governments do require the cooperation of crypto exchanges operating within their jurisdiction to track users’ capital gains. By working with exchanges, authorities can access transaction data and identify individuals or entities for tax purposes. However, the level of cooperation and specific regulations vary from country to country. Some jurisdictions have implemented stricter requirements for exchanges to report user information, while others may have limited regulations or are in the process of developing them.

Nigerian government can be successful with the new taxation law by having crypto platforms that are registered and operating in the country like Remitano, Luno, Roqqu, Bitmama, NairaEx etc. pay for their taxes but...Is this tax also applied to individuals using or trading cryptocurrency in these platforms? If yes... Do you think they will have any luck in taxing individuals using this platforms since we've not really had good results in collecting taxes from physical businesses? Also, most of these crypto merchants charges high transaction fees already and with the new law in place, can these platforms include a tax fee for every transactions without most users noticing?

Share your thoughts.
https://cointelegraph.com/news/nigeria-to-tax-crypto-digital-assets-10-on-capital-gains-experts-react/amp

It's way better to be taxed right now, because it means and makes cryptocurrency legal. It also makes for more opportunities for economic growth and expansion, less unemployment and new users will join the network, small businesses and entrepreneurs who understand cryptocurrency would be able to leverage it to assist their businesses in terms of payments and subscriptions and grow significantly without reliance on the meager profit or earnings from sitting at a white collar job inorder to sustain such a business. Exposed minds and those in diaspora with great ideas or with intentions to relocate back home would be able to also rely on cryptocurrency services for effective application.

Although, charges would become high, the taxation will encourage better exchange services to innovate and compete in the market to offer better service and new strategies would be formed by traders to save charge cost and other previous unnecessary expenses.

[Davidvictorson]

After reading the news about crypto taxation in Nigeria, I asked myself, what changed why are they interested in Bitcoin or the cryptocurrency market could it be that it is because Nigeria is in top ten in terms of the percentage of the population that owns cryptocurrency.  About 10.3 percent of our population owns cryptocurrency. That is like 22 million Nigerians own cryptocurrency¹. Also remember that as of September 3, 2022, Nigeria Export Processing Zones Authority (NEPZA) announced partnership with Binance so that they can take advantage of a near trillion dollar virtual economy in blockchains and digital economy².


At this point, it should be obvious why the federal government stated now that cryptocurrency will be taxed in Nigeria. The federal government if successful, will make a lot of money from this. The first hurdle for them is to who has cryptocurrency and who doesn't. One may argue that they may use KYC from Binance exchange platform. They can't do that for non-KYC required wallets like the Electrum wallet. Well I am interested in see how it goes.

1. https://triple-a.io/crypto-ownership-nigeria-2022/
2. https://techpoint.africa/2022/09/15/nigeria-biance-virtual-free-zone/#:~:text=On%20Saturday%2C%20September%203%2C%202022,Free%20Zone%20in%20West%20Africa.

[Sharonchy]

On the eve of his departure from office on May 28, former Nigerian President Muhammadu Buhari signed the Finance Act, 2023, into law. The act introduces a series of tax reforms aimed at modernizing the country’s fiscal framework. Among its provisions was the introduction of a 10% tax on gains from the disposal of digital assets, including cryptocurrencies.

In early 2021, CBN sent a memo to all commercial banks in the country to block the accounts of persons or establishments involved in crypto activities but with this bill passed into law it seems that the CBN ban of cryptocurrency is no longer effective since the government now wants a 10% taxation fee from the gain in cypto usage.

In many cases, governments do require the cooperation of crypto exchanges operating within their jurisdiction to track users’ capital gains. By working with exchanges, authorities can access transaction data and identify individuals or entities for tax purposes. However, the level of cooperation and specific regulations vary from country to country. Some jurisdictions have implemented stricter requirements for exchanges to report user information, while others may have limited regulations or are in the process of developing them.

Nigerian government can be successful with the new taxation law by having crypto platforms that are registered and operating in the country like Remitano, Luno, Roqqu, Bitmama, NairaEx etc. pay for their taxes but...Is this tax also applied to individuals using or trading cryptocurrency in these platforms? If yes... Do you think they will have any luck in taxing individuals using this platforms since we've not really had good results in collecting taxes from physical businesses? Also, most of these crypto merchants charges high transaction fees already and with the new law in place, can these platforms include a tax fee for every transactions without most users noticing?

Share your thoughts.
https://cointelegraph.com/news/nigeria-to-tax-crypto-digital-assets-10-on-capital-gains-experts-react/amp

When you are in a confused country where people don't know what they really want. They keep on making up and down decisions; in the first instance, there was no tangible reason for them to ban cryptocurrency, just because the young population was gaining financial independence from the government through cryptocurrency.

[Mate2237]

Dat act wey di former president signed, I no sure sae dis present president go even use am. Tinubu na progressivist so anything wey no resemble im, im no dey use am. If Nigerian government won dey tax cryptocurrency den let dem convert E-naira to exchange platforms so dat piple go visit am well well. Den dem fit collect their tax from there. Nigeria just need good working Economics team wey go make things very good for di country.

Di best ecoonomics team wey e don come to this country nai be Goodluck time. Omen that team was very good.

[CryptoHeadlineNews]

Secondly is that, will the government through this now allow the commercial banks to perform cryptocurrency transactions as against the ban made in 2021 considering the new administration.

Yes, that's exactly what it literally means, because before the ban of Bitcoin, users could it use Visa or Master cards to buy Bitcoin directly from online exchanges such as "Binance, Ramitano & e.t.c" & not have your account place under restriction if found to have done a crypto related transactions, unlike now that is mostly done through p2p and can't include a crypto related words while executing a transaction.

The first hurdle for them is to who has cryptocurrency and who doesn't. One may argue that they may use KYC from Binance exchange platform. They can't do that for non-KYC required wallets like the Electrum wallet. Well I am interested in see how it goes.

Yes, you are on point on what you just said, because it is only people who has funds on centralized exchanges that will be taxed, while people who has Bitcoin in non-custodian wallets and uses only decentralized exchange will be able to bypass this taxation.

[DaNNy001]

Dat act wey di former president signed, I no sure sae dis present president go even use am. Tinubu na progressivist so anything wey no resemble im, im no dey use am. If Nigerian government won dey tax cryptocurrency den let dem convert E-naira to exchange platforms so dat piple go visit am well well. Den dem fit collect their tax from there. Nigeria just need good working Economics team wey go make things very good for di country.

Di best ecoonomics team wey e don come to this country nai be Goodluck time. Omen that team was very good.

I don't know why the sequence tend to trend in  every Nigerian mindset which is that the previous adminstration did beta than the current one but na only this buhari regime nai people just dey think opposite of the mata because we don really suffer well well, but I think its rather too early to saying thing about this adminstration. But I also believe that goodluck tenure was also an extortion of Nigerian funds from different angles.