The Act aims to enhance fiscal transparency, boost revenue and recognize cryptocurrencies as legitimate assets.
On the eve of his departure from office, May 28, former President Muhammadu Buhari signed into law the Finance Act 2023.Â
The Act introduced a series of tax reforms aimed at modernizing the country’s fiscal framework. Among its provisions was the introduction of a 10% tax on gains from the disposal of digital assets, including cryptocurrencies.
The Finance Act 2023 is a comprehensive piece of legislation that seeks to enhance fiscal transparency, boost revenue generation and promote economic growth. Recognizing the increasing prominence of digital assets, such as cryptocurrencies, the Act aims to bring them into the purview of taxation.
By doing so, the Nigerian government seeks to create a level playing field and ensure that these assets contribute their fair share to the country’s development. This signifies 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 contacted the local crypto ecosystem to understand how the industry and the community accept the Act.
Local crypto expert Barnette Akomolafe, from the crypto exchange app M7pay spoke about how the 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 the already existing ban previously reported by Cointelegraph, the Central Bank of Nigeria barred commercial banks from servicing crypto exchanges back in February 2021.
Another local crypto expert, who prefers to stay anonymous said that the 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 provide adequate education and support to taxpayers in return. This point of view seemed to be supported by more crypto ethusiaists.
Just read that very soon you all will start paying taxes on your crypto and Forex profits in Nigeria.
10% of your capital gains goes to government . What are we going to get in return?
— CryptoLord NE (@CryptoDefiLord) June 8, 2023
In many cases, governments do require the cooperation of crypto 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 stricter requirements for exchanges to report user information, while others may have limited regulations or be in the process of developing them.
Related: Nigerian crypto company suspends withdrawals after BTC and naira compromise
Cointelegraph reached out to Binance Africa for a comment on this but didn’t get a response at the time of this publication.
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