Stakeholders in Blockchain Technology Association of Nigeria (SIBAN) Chairman Obinna Iwunna has commented on the progress of implementation of the Finance Law, 2023enacted into law on May 28. According to Iwunna, the successful implementation of the law will be challenging due to its premature introduction.
The law introduces a series of tax reforms aimed at modernizing the country's fiscal framework. Among its provisions was the introduction of a 10% tax on profits from the sale of digital assets, including CRYPTOCURRENCIES.
In a Cointelegraph interview, Iwunna criticized the idea of implementing a 10% tax on cryptocurrencies in the current uncertain climate, likening it to putting the cart before the horse. He highlighted the current problem with the Central Bank of Nigeria (CBN) instruct commercial banks not to provide financial transactions involving cryptocurrencies.
As commercial banks are not yet able to process cryptocurrency transactions, he questioned how it is possible to tax something that is not recognized or defined, emphasizing the need for clarity and infrastructure enablement before imposing taxes. In support of this, Iwunna referred to the way in which Nigeria's National Information Technology Development Agency (NITDA) defined blockchain technology through a collaborative effort and the formulation of a national policy.
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?
— CryptoLord NE (@CryptoDefiLord) June 8, 2023
Iwunna emphasized that cryptocurrency involves security, currency, and technology, overseen by the Nigerian Securities and Exchange Commission (SEC), CBN, and NITDA, respectively. Each entity has a specific role to play, but a comprehensive and unified understanding of cryptocurrencies is crucial. Once a collective definition is established, policymakers can proceed to develop appropriate policies, regulations, and eventually tax measures.
Asked if Nigerian crypto stakeholders have approached the SEC and CBN with their concerns, Iwunna confirmed that they have reached out and are currently awaiting a response. While some discussions have taken place, no final decisions have been made.
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Acknowledging the government's goal of broadening the tax base, Iwunna stated that it is important to ensure that taxes do not impede the growth of the cryptocurrency industry. Clarity is sought regarding the implications of taxes and their connection to cryptocurrency recognition and associated procedures.
According to Iwunna, the lack of consultation, as observed during the launch of E-Naira, can hinder the adoption of tax laws. If there had been collaboration with the digital asset ecosystem, the E-Naira could have seen rapid adoption by millions of Nigerians.
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