The Nigerian Federal Inland Revenue Service (FIRS) is set to introduce legislation aimed at taxing the expanding crypto sector, as reported by local media outlet Business Day. This move is part of an effort to update the country’s regulatory framework and bring the crypto industry under the purview of taxation.
During a session with the National Assembly’s Finance Committees, FIRS Executive Chairman Zacch Adedeji emphasized that the proposed regulation would not only drive economic growth but also encourage innovation within the sector. The goal is to modernize Nigeria’s existing laws to incorporate new technologies that have previously gone unaddressed.
Industry experts have long been advocating for the Nigerian government to adopt a regulatory approach to the crypto sector. In 2021, following the government’s ban on financial institutions interacting with cryptocurrencies, university professor Tayo Oyedeji suggested that emerging economies, like Nigeria, focus on taxing crypto gains rather than outright prohibition. Oyedeji highlighted the revenue potential, stating that Nigeria, as a significant crypto market, could generate millions through crypto gains tax.
Nigeria stands as one of the largest crypto markets in Africa, with the Nigerian SEC Director General Emomotimi Agama estimating the country’s digital assets market to be valued at over $400 million. The decision to introduce crypto regulation comes as some platforms within the industry have begun collecting Value-Added Tax (VAT) on transaction fees. For example, KuCoin announced plans to implement a 7.5% VAT on all transaction fees in Nigeria.
In recent times, there has been a growing push for crypto regulation in Nigeria. Finance Minister Wale Edun has urged the Securities and Exchange Commission (SEC) to prioritize regulatory clarity for the industry. This call for regulation follows a crackdown on crypto platforms, leading to global players like OKX exiting the Nigerian market. Additionally, Binance is currently facing legal action from Nigerian authorities over allegations of money laundering and tax evasion. The detention of Binance executive Tigran Gambaryan further highlights the challenges faced by the industry.
The move to regulate the crypto sector in Nigeria is a crucial step towards fostering economic growth, promoting innovation, and addressing the challenges within the industry. By introducing clear regulatory frameworks and taxation policies, Nigeria can position itself as a leader in the African crypto market, ensuring sustainable growth and compliance with international standards.
