Nigeria’s latest cryptocurrency tax guidelines are drawing criticism from traders, industry experts and digital asset businesses, with many arguing that crypto users should be taxed only on profits rather than on the movement of digital assets.
The concerns come days after the Nigeria Revenue Service (NRS) released new tax guidelines for virtual assets, introducing new compliance requirements for Virtual Asset Service Providers (VASPs), including mandatory Tax Identification Numbers (TINs) for new customer accounts and clearer tax obligations for crypto-related activities.
While many industry participants say they support the government’s efforts to regulate the sector and improve tax compliance, they believe parts of the new framework could create unnecessary costs for users and businesses.
Industry wants taxes tied to actual gains
A major concern raised by stakeholders is the treatment of cryptocurrency transactions that do not generate income.
According to industry participants quoted by BusinessDay, the current approach could result in taxes being applied to crypto transfers even when users have not made a profit. They argue that taxation should be based on realised gains, similar to how profits from other investments are taxed, rather than on the movement of assets between wallets or platforms.
For example, users often transfer cryptocurrency between their own wallets for security reasons, move funds between exchanges or send stablecoins for payments and remittances. These transactions may not represent taxable income because the owner has not earned any financial gain.
Stakeholders say taxing such transactions could discourage the use of regulated platforms and increase the cost of participating in Nigeria’s digital asset market.
Concerns over the impact on the crypto industry
Industry leaders also warn that the new rules could affect Nigeria’s standing as one of Africa’s largest cryptocurrency markets.
They argue that if compliance costs become too high, some traders and businesses may choose to use foreign exchanges or decentralised platforms that are outside the country’s regulatory framework. That, they say, could make tax collection more difficult and reduce activity on licensed Nigerian platforms.
Some stakeholders also believe the guidelines could place additional compliance burdens on crypto companies that are already adapting to Nigeria’s evolving regulatory environment.
Government aims to strengthen tax compliance
The NRS says the guidelines are intended to improve tax compliance in the country’s fast-growing digital asset sector and provide clearer rules for businesses operating in the industry.
The framework requires regulated crypto companies to verify customers’ Tax Identification Numbers, maintain transaction records and comply with reporting obligations. It also sets out how different virtual asset activities, including trading, staking, mining and other crypto-related income, should be treated for tax purposes.
The government has said the measures form part of broader tax reforms designed to bring more economic activities into Nigeria’s formal tax system.
Debate expected to continue
Many stakeholders say they are not opposed to paying taxes on cryptocurrency profits. Instead, they are calling on regulators to review parts of the framework so that taxes apply to realised gains rather than routine transfers that do not generate income.
As the guidelines begin to take effect, discussions between regulators and industry participants are expected to continue, with many hoping that future revisions will provide greater clarity while supporting the continued growth of Nigeria’s crypto ecosystem.