The Nigerian tax authority this week released new rules covering cryptocurrencies, stablecoins, non-fungible tokens and other virtual assets, including stamp duties and withholding taxes on certain transactions.
The measures are part of Nigeria’s broader effort to overhaul its tax system, increase government revenue and bring more economic activity into the formal tax system. The reforms also target emerging sectors such as e-commerce and digital assets.
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Under the new rules, cryptocurrency businesses may be able to remit taxes in digital assets rather than Nigeria’s naira currency.
But industry representatives say the structure of the new taxes could discourage users from operating through regulated platforms.
Obinna Iwuno of the Digital Assets Coalition said the rules could push activity away from regulated exchanges and effectively turn cryptocurrency platforms into tax collection agents.
“Tax the profit, not the movement of money,” Iwuno said.
He warned that the tax structure could be particularly damaging in Nigeria because cryptocurrency users are highly mobile and frequently use digital assets for payments, savings and cross-border transfers.
“The current design places the highest transaction tax burden … on one of the most mobile user bases in the world,” Iwuno said.
Nigeria has emerged as one of Africa’s largest cryptocurrency markets despite years of regulatory uncertainty. Digital assets have become widely used for transferring money across borders and for everyday financial activities.
The government’s challenge will be balancing its push for greater tax revenues with the need to keep cryptocurrency activity within regulated channels. Industry participants fear that higher transaction costs could instead encourage users and businesses to move their activity elsewhere or outside the formal financial system.
The new rules therefore mark a significant step in Nigeria’s effort to bring the rapidly growing digital asset sector into its tax framework, but they are already facing resistance from an industry concerned about the impact on adoption.
