The government of Nigeria is introducing new tax reforms that include specific regulations for cryptocurrency. As part of these reforms, the Executive Chairman of the Federal Inland Revenue Service (FIRS), Dr. Zacch Adedeji has proposed the creation of a clear framework for how cryptocurrencies will be taxed in Nigeria.
The Federal Government noted that this is important because it allows the government to effectively collect taxes on crypto transactions, similar to practices in other countries.
The proposed reform aims to fill gaps in current regulations and ensure that cryptocurrencies are properly monitored and taxed. Dr. Adedeji highlighted the need to develop these rules to support economic growth while minimizing any negative impact on Nigeria’s economy.
The proposed Bill is part of four new bills presented to the National Assembly to enhance the tax system and create new revenue sources for the government.
These include changing the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service (NRS), introducing the Nigeria Tax Bill for a unified taxation framework, implementing the Nigeria Tax Administration Bill for efficient tax law administration, and establishing the Joint Revenue Board, tax appeal tribunal, and tax ombudsman to address revenue administration disputes.
Nigeria has emerged as a prominent player in the cryptocurrency space, showcasing one of the highest adoption rates in Africa.
Many Nigerians have turned to cryptocurrencies as a means to achieve financial inclusion, particularly in response to high inflation and currency devaluation.
This trend has been highlighted by Chainalysis, which noted Nigeria as one of the leading nations in terms of crypto adoption.
Read also: Crypto firms must have a physical presence in Nigeria to operate legally
Despite this enthusiasm, the regulatory environment remains complex. In February 2021, the Central Bank of Nigeria (CBN) issued a directive prohibiting banks from facilitating cryptocurrency transactions.
This move created uncertainty but did not significantly deter public interest in digital currencies. Although the apex bank has revised this directive, the situation hasn’t been like pre-February, 2021.
The regulatory landscape remains complex, with ongoing discussions and initiatives from the Nigerian Securities regulator, NITDA, and Tax body about how to effectively integrate cryptocurrencies into the formal economy while ensuring consumer protection and financial stability.
