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.
The comprehensive legislation seeks to enhance fiscal transparency, boost revenue generation and promote economic growth. Recognizing the increasing prominence of digital assets, the act aims to impose a tax on cryptocurrencies.
By doing so, the Nigerian government seeks to create a level playing field to ensure digital asset holders contribute their share of taxes to the country’s development. This indicates Nigeria’s recognition of the growing influence and economic potential of digital assets, while ensuring the tax system keeps pace with the evolving financial landscape. Cointelegraph contacted members of the local crypto ecosystem to understand how the industry and the community are receiving the new legislation.
Barnette Akomolafe, CEO of the crypto payments app, M7pay, told Cointelegraph about 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 servicing crypto exchanges in February 2021.
Another local crypto expert, who preferred to stay anonymous, said the taxation of cryptocurrencies could be challenging due to the unique nature of digital assets, such as valuation, tracking transactions and international complexities. They added that governments must establish clear guidelines and provide adequate education and support to taxpayers. This point of view seemed to be supported by more crypto enthusiasts.
Just read that very soon you all will start paying taxes on your crypto and Forex profits in Nigeria.
10% of your capital gains goes to government . What are we going to get in return?
— CryptoLord NE (@CryptoDefiLord) June 8, 2023
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.
Cointelegraph reached out to Binance Africa for comment but didn’t receive a response by publication time.