Nigeria Eyes Crypto Tax Revenue

Nigeria Aims to Increase Revenue

The Nigerian Securities and Exchange Commission (SEC) has announced it is working to bring transactions on licensed cryptocurrency exchanges into the formal tax system. A bill outlining a tax regime for cryptocurrency transactions is reportedly before Nigerian lawmakers, who are likely to pass it in the first quarter of 2025.

According to a report, the rule amendment is part of an effort to bolster Nigeria’s revenue and reduce its budget deficit. The Nigerian SEC is confident that a “substantial amount of tax revenue will accrue from cryptocurrency transactions.”

Confirmation that Nigeria is on the verge of taxing cryptocurrency transactions comes several months after the country’s Federal Inland Revenue Service (FIRS) first suggested the idea. At that time, the FIRS argued the amendment was necessary because Nigeria was not benefiting from crypto-related activities despite being widely recognized as one of the biggest crypto markets globally.

Since then, the FIRS proposal has won the backing of some Nigerian civil society groups, which has culminated in lawmakers working on amending tax laws to accommodate crypto transactions.

Besides seeking to bolster government revenue, the SEC said the bill before lawmakers also seeks to establish a licensing regime for residents interested in trading digital assets.

“We anticipate gradual traction toward centralized exchanges because they will provide greater protections and comfort for investors,” the Nigerian regulator reportedly said.

Meanwhile, reactions to Nigeria’s proposed tax on cryptocurrency transactions have been mixed, reflecting the diverse perspectives on this development. Some see this as a positive step toward regulating the crypto space, potentially providing clarity and legitimacy to the industry. Others, however, have expressed concerns that this could stifle growth and discourage investment in the sector.

Obinna Iwuno, a crypto compliance specialist, told Bitcoin.com News that the trajectory of growth for this industry should be regulations, licences, and then taxation. He said the tax regulations should also be very clear.

“It should be made clear who exactly is being taxed, whether it is the platforms or individuals carrying out crypto transactions on the platforms. Inasmuch as taxes is a civic responsibility of individuals and businesses to the government, the government should first think of enabling the industry to grow before seeking to collect tax from the industry,” Iwuno said.

The specialist asserts that the crypto sector in Nigeria is in its early stages, with every platform being a startup. Encouraging innovation is crucial to grow the sector and unlock its potential to contribute significantly to the industry, he said.