The tax regulator in Nigeria, the Federal Inland Revenue Service (FIRS), is set to introduce new tax laws in September to oversee the crypto industry.
Starting in June, Nigeria began imposing a 7.5% value-added tax (VAT) on all cryptocurrency transactions. The success of this move likely triggered the upcoming broader tax regulations for players in the crypto market.
A crucial question arises: how will Nigeria effectively tax an industry it has previously tried to suppress?
In 2022, the crypto industry facilitated $20 billion worth of remittance inflows to Nigeria, leading the government to take significant actions due to the high volumes vulnerable to illegal activities.
In the same year, the government indirectly prohibited all crypto operations in Nigeria and pursued legal action against Binance, a prominent trading platform in the country. Subsequently, it announced intentions to target other peer-to-peer (P2P) exchanges dealing with the naira.
The development of new regulatory frameworks indicates a shifting attitude towards crypto or a fulfillment of the government’s pledge to closely regulate the crypto sector.
The Securities and Exchange Commission (SEC) of the country has also been proactive, raising operational costs for crypto businesses and mandating physical operations within Nigeria for company owners in the sector.
Dr. Zacch Adedeji, the executive chairman of FIRS, emphasized the importance of regulating crypto in a manner that supports Nigeria’s economy without undermining its popularity among millions of daily users and traders.