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On 28 May, on the eve of his departure from office, former President Muhammadu Buhari signed the Finance Act 2023 into law.
Act City: A series of tax reforms aimed at modernizing the country’s fiscal structure. Among its provisions was the introduction of a 10% tax on gains from disposal of digital assets, including cryptocurrencies.
The Finance Act 2023 is a comprehensive legislation that seeks to increase fiscal transparency, promote revenue generation and promote economic growth. Recognizing the growing prominence of digital assets, such as cryptocurrencies, the Act aims to bring them under the ambit of taxation.
By doing so, the Nigerian government seeks to create a level playing field and ensure that these properties contribute their fair share to the development of the country. This reflects Nigeria’s recognition of the growing influence and economic potential of digital assets while ensuring that the tax system keeps pace with the evolving financial landscape. Cointelegraph reached out to the local crypto ecosystem to understand how the industry and community are accepting the act.
Local crypto expert Barnett Ekomolafe of crypto exchange app M7pay talks about how taxation can be seen as a step towards recognizing cryptocurrencies as legitimate assets and integrating them into the existing financial and regulatory framework . This is considering a pre-existing ban previously reported by Cointelegraph, with the Central Bank of Nigeria barring commercial banks from servicing crypto exchanges back in February 2021.
Another local crypto expert, who preferred to remain anonymous, said that taxation of cryptocurrencies can be challenging due to the unique nature of digital assets, such as valuation, tracking transactions and international complexities. Governments need to establish clear guidelines and in turn provide adequate education and support to taxpayers. This view seems to be supported by more crypto atheusists.
Just read that very soon all of you will start paying taxes on your crypto and forex profits in Nigeria.
10% of your capital gains go to the government. What are we going to get in return?
— Cryptolord NE (@CryptoDefiLord) June 8, 2023
In many cases, governments require the cooperation of crypto exchanges operating in their jurisdictions to track capital gains of users. By working with exchanges, authorities can access transaction data and identify individuals or entities for tax purposes. However, the level of cooperation and the specific rules vary from country to country. Some jurisdictions have imposed stricter requirements for exchanges to report user information, while others may have limited regulations or may be in the process of developing them.
Connected: Nigerian crypto company suspends withdrawals after BTC and Naira settlement
Cointelegraph reached out to Binance Africa for comment, but did not receive a response at the time of publication.
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