On the eve of leaving office on May 28, former Nigerian President Muhammadu Buhari signed the 2023 Finance Act into law.
verb He presents 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.
Comprehensive legislation seeks to enhance financial transparency, increase revenue generation, and promote economic growth. Recognizing the growing importance of digital assets, the law aims to tax cryptocurrencies.
In doing so, the Nigerian government seeks to create a level playing field to ensure that digital asset holders contribute their share of taxes to the country’s development. This signals Nigeria’s recognition of the growing influence and economic potential of digital assets, while ensuring that the tax system keeps pace with the evolving financial landscape. Cointelegraph reached out to members of the local cryptocurrency ecosystem to understand how the industry and society receive the new legislation.
Barnett Acomolavi, CEO of crypto payments app M7pay, told Cointelegraph how the new taxes can be seen as a step toward recognizing cryptocurrencies as legitimate assets, and integrating them into the existing financial and regulatory framework. This comes after the Central Bank of Nigeria banned commercial banks from serving cryptocurrency exchanges in February 2021.
Related: Nigerian crypto company suspends withdrawals after BTC and naira settlement
Another local crypto expert, who preferred to remain anonymous, said taxing cryptocurrencies can be difficult due to the unique nature of digital assets, such as valuation, transaction tracking, and international complexities. They added that governments should set clear guidelines and provide appropriate education and support to taxpayers. This point of view seems to be supported by more and more cryptocurrency enthusiasts.
Just read that very soon you will all start paying taxes on your cryptocurrency and forex earnings in Nigeria.
10% of the capital gains go to the government. What do we get in return?
– CryptoLord NE (CryptoDefiLord) June 8, 2023
In many cases, governments require the cooperation of cryptocurrency exchanges operating in 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.
Cointelegraph has reached out to Binance Africa for comment but had not received a response by the time of publication.
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