Nigerian Government Set to Tax Cryptocurrency, Other Digital Assets

Nigeria’s Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has announced that there is a provision to tax cryptocurrency and other digital assets in the 2022 Finance Bill.

According to the statement published by Laolu Akande, spokesperson to Vice-President Yemi Osinbajo, Zainab Ahmed updated the National Economic Council (NEC) on the core properties of the 2022 Finance Bill at an extraordinary digital event on Thursday.

Following her presentation, the governors of Sokoto, Borno, Kaduna, Kebbi and Ogun states, among others, commented on the bill.

The NEC agreed to update the draft Finance Bill with additional inputs from state governors as it goes ahead to the Federal Executive Council (FEC) before President Muhammed Buhari sends it to the National Assembly.

The Minister stated that the proposed bill is established on five influential policy anchors. She itemized the drivers as tax equity, climate change, job creation/economic growth, tax incentives’ reform and revenue generation/tax administration.

Further details about FG’s proposed tax on cryptocurrency

The Minister said the proposed bill clarified the taxation of cryptocurrency and other digital assets in line with the government’s policy of enhancing cross-border and international taxation of growing e-commerce with emerging markets.

“The bill seeks to amend and offer extensive provisions in particular laws linked with the public financial management of the federation,” Ahmed said. “Other aspects of the Finance Bill include chargeable assets, exclusion of losses, and replacement of business assets,” she added.

The bill contains an amendment under Chargeable Assets stating that “subject to any exceptions provided by this Act”, all forms of property shall be assets for this Act, whether situated in Nigeria or not, including options, debts, digital assets and incorporeal property generally.”

“Also, under the Tax Equity pillar, all sectors of the economy would be brought into the tax net including Capital Gains Tax from digital assets, cable undertakings, lottery and gaming business,” the statement quoted Mrs Zainab Ahmed as saying.

She said by enhancing this policy, Nigeria would become a part of the sophisticated ranks of jurisdictions presently taxing digital assets. The UK, the US, Australia, India, Kenya and South Africa are the other countries currently taxing digital assets.

In 2021, the Central Bank of Nigeria (CBN) directed banks to close accounts of cryptocurrency traders or entities involved in cryptocurrency transactions within their systems.

The apogee bank further implored citizens to avoid crypto assets, warning that they are used to fund illegal dealings. Recently the securities and exchange commission (SEC) has disclosed that it will not consider promoting cryptocurrencies as it pushes for adopting digital assets across the country.

The Securities and Exchange Commission (SEC) of Nigeria has no intention to involve crypto in its digital asset pursuit. That is, at least until regulators reach a consensus on the standards that protect investors from the market’s jaw-dropping volatility.