Nigeria's Landmark $81 Billion Tax Demand From Binance
By: Eliza Bennet
Nigeria’s Federal Inland Revenue Service (FIRS) has filed a legal claim against the cryptocurrency giant Binance, seeking a staggering $81 billion for alleged unpaid taxes and numerous penalties. According to local reports, the demand encompasses $79.5 billion in economic damages combined with approximately $2 billion in outstanding income tax for the years 2022 and 2023. Nigeria's action represents one of the most significant financial claims against a crypto firm posed by a national government, overshadowing previous penalties incurred by Binance, such as the $4.3 billion paid to U.S. regulators in the past.
This legal suit is a part of a larger crackdown on Binance by Nigerian authorities who have accused the exchange of operating without proper disclosure to Nigerian regulators while benefiting from a substantial user base in the country. The FIRS accuses Binance of violating Nigeria’s Companies Income Tax (CIT) Act and the Significant Economic Presence (SEP) Order. The latter mandates compliance for foreign entities making over N25 million ($30,000) annually from Nigerian clients. Binance's operations reportedly generated $35.4 million in profits from a trading volume of $21.6 billion in just 2023.
The tax demand includes additional fines such as a 10% penalty for tax evasion and a 26.75% interest rate calculated from January 2023 through January 2024. Furthermore, authorities claim that Binance has operated unauthorized financial services and non-compliance with anti-money laundering standards, which purportedly inflicted economic hardships on the country. The case also touches on a broader narrative of internal conflicts, as previously, charges against a Binance executive were withdrawn amid accusations of corruption against Nigerian government officials.
Nigerian officials maintain their stance against allegations of corruption brought by Binance, standing firm on their claims of economic harm due to the crypto exchange's alleged misconduct. This evolving situation continues to underscore the complexities and growing tensions between traditional state governance frameworks and the rapid growth of decentralized financial systems like cryptocurrency exchanges. While Binance has yet to publicly respond to the Nigerian tax claim, the ramifications for international operations and regulatory compliance will likely echo throughout the global crypto industry landscape.
