Nigeria’s Revenue Service to Implement Cryptocurrency Taxation Framework

• Nigeria’s FIRS targets crypto transactions with a new taxation framework in 2023.
• Binance faces scrutiny in Nigeria for alleged $20B untaxed turnover and tax violations.
• SEC pushes crypto exchanges to comply, signaling stricter regulations for Nigeria’s crypto market.

Nigeria’s Federal Inland Revenue Service (FIRS) is gearing up to introduce a comprehensive taxation system for crypto transactions. This plan aims to streamline existing tax laws, boost revenue collection, and replace outdated regulations with modern, flexible frameworks.

Even with the regulatory shift, cryptocurrency exchanges operating in Nigeria, especially Binance, are under increased scrutiny. Nigerian officials allege that Binance had an untaxed turnover of over $20 billion in 2023.

The exchange faces accusations of failing to pay value-added and corporate taxes and submit tax returns. As the investigation progresses, Binance’s legal status in Nigeria remains uncertain.

In an interview with Bloomberg, Emomotimi Agama, the Chief of Nigeria’s Securities and Exchange Commission (SEC), expressed optimism about the upcoming regulations. Agama remarked: 

“Being a crypto enthusiast and fintech enthusiast, I can tell you without a doubt that this is going to happen sooner than you think.” 

Additionally, Agama highlighted the importance of supporting Nigeria’s youth in utilizing the benefits of fintech, noting the country’s market size. He explained that the SEC’s primary goal is to establish a formal platform for crypto activities, enabling the collection of necessary information while preventing the misuse of digital assets. 

Moreover, Nigeria’s SEC has moved forward in regulating crypto asset exchanges. In June 2023, the SEC issued a directive requiring all crypto asset exchanges and digital asset traders to re-register their businesses within 30 days or face potential legal actions. 

Despite strict regulations, Nigeria remains a key player in the global crypto market. In 2023, the country ranked second on the Global Crypto Adoption Index, demonstrating the adaptability and growing interest in digital assets among Nigerians.

However, government policies remain strict, and legal actions against crypto firms continue, including the probation of Binance executives and the detention of $37 million worth of crypto assets.