On the eve of his departure from office on May 28, former President Muhammadu Buhari signed into law the Finance Act 2023.
The act inserted a series of tax reforms aimed at modernizing the country's fiscal framework. Among his provisions was the introduction of a 10% tax on profits from the alienation of digital resources, including cryptocurrencies.
The 2023 Finance Law is a comprehensive law that seeks to improve fiscal transparency, boost revenue generation, and promote economic growth. Recognizing the growing importance of digital assets, such as cryptocurrencies, the Law aims to include them in the scope of taxation.
In doing so, the Nigerian government seeks to create a level playing field and ensure that these assets contribute their fair share to the development of the country. This signifies Nigeria's recognition of the growing influence and economic potential of digital assets while ensuring that the tax system keeps up with the evolving financial landscape. Cointelegraph reached out to the local crypto ecosystem to understand how the industry and community accept the Act.
Local crypto expert Barnette Akomolafe, from crypto exchange app M7pay, spoke about how the taxes 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 the already existing ban previously reported by Cointelegraph, the Central Bank of Nigeria banned commercial banks from servicing crypto exchanges in February 2021.
Another local crypto expert, who prefers to remain anonymous, said that cryptocurrency taxation can be challenging due to the unique nature of digital assets, such as valuation, transaction tracking, and international complexities. Governments need to set clear guidelines and, in return, provide proper taxpayer education and support. This point of view seemed to be supported by more cryptocurrency enthusiasts.
Just read that very soon everyone will start paying taxes on their cryptocurrency and forex earnings in Nigeria.
10% of your capital gains goes to the government. What are we going to get in return?
โ CryptoLord NE (@CryptoDefiLord) June 8, 2023
In many cases, governments require the cooperation of cryptocurrency exchanges operating within their jurisdiction to track users' capital gains. By working with exchanges, authorities can access transaction data and identify individuals or entities for tax purposes. However, the level of cooperation and specific regulations vary from country to country. Some jurisdictions have implemented more stringent requirements for exchanges to report user information, while others may have limited regulations or are in the process of developing them.
Related: Nigerian Crypto Firm Suspends Withdrawals After BTC, Naira Compromise
Cointelegraph reached out to Binance Africa for comment on this, but did not receive a response at press time.
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