The Nigerian Federal Inland Revenue Service (FIRS) is set to implement new legislation to tax the expanding crypto sector, as reported by local media outlet Business Day. FIRS Executive Chairman Zacch Adedeji revealed this plan during a meeting with the National Assembly’s Finance Committees, emphasizing that the proposed regulation aims to foster economic growth and promote innovation.
Adedeji highlighted the need to update Nigeria’s outdated regulatory framework to accommodate new technologies that have previously been unaddressed by existing laws. Dare Adekanmbi, Adedeji’s special adviser on media, expressed the importance of creating a law that regulates this area of the economy without hindering Nigeria’s economic development.
Industry experts have long advocated for the Nigerian government to adopt a taxation approach towards the crypto market. In 2021, when the government imposed a ban on financial institutions interacting with the crypto space, university professor Tayo Oyedeji suggested that emerging economies should prioritize taxation over prohibition. Oyedeji emphasized that Nigeria, being a significant crypto market, has the potential to generate substantial revenue from taxing crypto gains.
Nigeria is recognized as one of the largest crypto markets in Africa, with the Nigerian SEC Director General estimating the digital assets market to be valued at over $400 million. The move towards introducing legislation comes as some crypto platforms have begun collecting Value-Added Tax (VAT) on transaction fees. For instance, KuCoin announced in July that it would impose a 7.5% VAT on all transaction fees in Nigeria.
The call for crypto regulation in Nigeria has gained momentum in recent times. Finance Minister Wale Edun has urged the Securities and Exchange Commission (SEC) to prioritize providing regulatory clarity for the industry. This call for regulation follows a crackdown on crypto platforms that led to global players like OKX exiting the Nigerian market.
Moreover, Binance, a prominent crypto exchange, is currently facing legal action from Nigerian authorities over allegations of money laundering and tax evasion. Tigran Gambaryan, a Binance executive, is currently detained at the Kuje Correctional Centre in Abuja, despite international appeals for his release due to his deteriorating health. The Nigerian authorities maintain that these actions are part of a broader effort to ensure compliance in the burgeoning crypto industry.