The Nigerian Federal Inland Revenue Service (FIRS) is making moves to introduce legislation aimed at taxing the rapidly growing crypto sector. This decision comes as part of a larger effort to modernize Nigeria’s regulatory framework and encourage economic growth and innovation within the digital asset space.
During a session with the National Assembly’s Finance Committees, FIRS Executive Chairman Zacch Adedeji laid out the intention behind the proposed regulation. He emphasized the need for a new law to regulate the crypto economy in a way that supports economic development without hindering progress. This initiative aims to bring Nigeria’s outdated laws up to speed with new technologies shaping the financial landscape.
Industry experts have long been advocating for a more regulatory approach to the crypto space in Nigeria. In the past, when the government imposed a ban on financial institutions interacting with crypto, experts like university professor Tayo Oyedeji suggested that taxation should take precedence over prohibition. Oyedeji highlighted the potential for Nigeria to generate significant revenue through crypto gains tax, given the country’s position as a major crypto market in Africa.
Nigeria has emerged as one of the largest crypto markets on the African continent, with the digital assets market estimated to be valued at over $400 million, according to Nigerian SEC Director General Emomotimi Agama. In response to this growth, some crypto platforms have already begun implementing Value-Added Tax (VAT) on transaction fees, with KuCoin announcing a 7.5% VAT charge on all fees in Nigeria.
Recent months have seen a heightened push for crypto regulation in Nigeria, with Finance Minister Wale Edun urging the Securities and Exchange Commission (SEC) to provide clearer guidelines for the industry. This call for regulatory clarity comes on the heels of a crackdown on crypto platforms, leading to the exit of global players like OKX from the Nigerian market. Furthermore, Binance is currently facing legal action from Nigerian authorities over allegations of money laundering and tax evasion, with one of its executives, Tigran Gambaryan, being detained despite international appeals for his release on health grounds.
As Nigeria grapples with the challenges and opportunities presented by the booming crypto sector, the introduction of taxation legislation marks a significant step towards regulating and harnessing the potential of digital assets for economic growth and development in the country.
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