Nigerian Lawmakers Eye Economic Boost Through Crypto Taxation

By: Eliza Bennet

Nigeria is preparing to introduce a new taxation framework targeted at the burgeoning cryptocurrency sector, a move expected to significantly boost the nation's revenue streams. The Federal Inland Revenue Service (FIRS) aims to present this bill to parliament by September, according to local media reports.

FIRS Executive Chairman Zacch Adedeji revealed these plans during consultations with the National Assembly’s Finance Committees. He emphasized that the initiative aims to modernize Nigeria’s outdated regulatory framework by integrating new technologies previously unaddressed by existing laws.

Adedeji stated, “We need a law that regulates that area of our economy. This is why we are having this engagement with the legislators. We will regulate it in a way that is not injurious to the economic development of Nigeria.” This sentiment echoes the calls from industry experts who have been urging the Nigerian government to adopt a regulatory rather than prohibitive approach towards the crypto industry.

Nigeria, one of Africa’s largest crypto markets, had imposed a ban on financial institutions interacting with cryptocurrency companies in 2021. Experts like university professor Tayo Oyedeji had suggested that emerging economies should focus on taxation instead. Oyedeji previously noted that Nigeria could make millions by taxing crypto gains.

In addition, the Nigerian Securities and Exchange Commission (SEC) Director General, Emomotimi Agama, recently mentioned that the country’s digital assets market is estimated to be worth over $400 million. These figures highlight the substantial potential for revenue generation through effective regulation and taxation.

In light of these developments, major crypto platforms have already begun to comply with local regulations. KuCoin, for example, announced in July that it would start collecting a 7.5% Value-Added Tax (VAT) on all transaction fees in Nigeria.

However, the push for regulatory clarity in Nigeria’s crypto sector has not been without its challenges. The Finance Minister, Wale Edun, recently urged the SEC to prioritize establishing clear regulations for the industry. This call comes on the heels of a recent crackdown on crypto platforms, which has led to global entities like OKX exiting the Nigerian market due to regulatory hurdles.

Moreover, Binance is currently embroiled in legal issues with Nigerian authorities over alleged money laundering and tax evasion. A Binance executive remains detained, despite international advocacy for his release due to deteriorating health conditions.

Nigerian authorities maintain that their rigorous actions are aimed at ensuring compliance within the burgeoning crypto industry, insisting that these measures are part of a broader effort to create a transparent and accountable financial system.