• About Us
  • Careers
  • Contact
No Result
View All Result
Saturday, June 7, 2025
DeFi Planet
  • News
    • People
    • Business
    • Crime
    • Regulation
    • Crypto
    • CBDC
  • Markets
    • Bitcoin
    • Ethereum
    • Stablecoins
    • Altcoins
    • Crypto ETFs
    • Memecoins
  • Policy
  • Articles
    • Press Releases
    • Opinion
    • Explainers
    • Guest Post
    • Sponsored
  • Directory
    • Companies
    • People
    • Products
    • Wallets
  • Multimedia
    • Videos
    • Podcasts
  • Learn
    • DeFi Basics
    • Tutorials
    • Reviews
    • Blockchain Fundamentals
  • Research
    • Case Studies
  • Explore
    • DeFi
    • Crypto Gaming
    • NFT
    • DAO
    • Metaverses
  • Jobs
  • Markets Pro
    • DeFi Planet Pro
    • Spend Crypto
    • Swap Crypto
    • Coin Prices
    • Crypto Exchanges
    • Crypto Analyzer
  • News
    • People
    • Business
    • Crime
    • Regulation
    • Crypto
    • CBDC
  • Markets
    • Bitcoin
    • Ethereum
    • Stablecoins
    • Altcoins
    • Crypto ETFs
    • Memecoins
  • Policy
  • Articles
    • Press Releases
    • Opinion
    • Explainers
    • Guest Post
    • Sponsored
  • Directory
    • Companies
    • People
    • Products
    • Wallets
  • Multimedia
    • Videos
    • Podcasts
  • Learn
    • DeFi Basics
    • Tutorials
    • Reviews
    • Blockchain Fundamentals
  • Research
    • Case Studies
  • Explore
    • DeFi
    • Crypto Gaming
    • NFT
    • DAO
    • Metaverses
  • Jobs
  • Markets Pro
    • DeFi Planet Pro
    • Spend Crypto
    • Swap Crypto
    • Coin Prices
    • Crypto Exchanges
    • Crypto Analyzer
No Result
View All Result
DeFi Planet
No Result
View All Result

Nigeria’s New Crypto Tax Law: A Strategic Move for Revenue or a Barrier to Growth?

18 December 2024
in Articles, Opinion, Regulation
Reading Time: 8 mins read
111 1
Home Articles

Contents

Toggle
  • Key Features of the New Crypto Tax Bill
  • Why the Nigerian Government Introduced the Bill
  • Implications for Nigeria’s Crypto Ecosystem
    • Broader Implications for African Markets
  • Final Thoughts

Last updated on January 29th, 2025 at 11:03 am

Nigeria’s Federal Inland Revenue Service (FIRS) recently hinted at introducing new regulations to tax cryptocurrency transactions.

It claimed the bill is part of its drive to build a trustworthy, data-driven tax system aligned with Nigeria’s economic objectives. 

The new crypto tax bill, which was expected to be introduced in the country’s legislative chambers in September 2024, is expected to lay the groundwork to help modernize the nation’s tax system and address the rapid growth of the cryptocurrency market.

Nigeria has been a global leader in cryptocurrency adoption, particularly among developing nations. It is one of the largest crypto markets globally, with high levels of peer-to-peer (P2P) trading volume and significant use cases for remittances and payments. So, it is important to ask if this new law will facilitate growth, as the tax agency claimed, or stifle it, especially considering Nigeria’s role in the broader context of the industry.

Key Features of the New Crypto Tax Bill

One of the core elements of Nigeria’s new crypto tax bill is a 7.5% VAT on cryptocurrency transactions. However, this tax applies specifically to service fees rather than the total value of the cryptocurrency being transferred. For instance, if a user pays a fee to transfer Bitcoin or another digital currency, only that fee is subject to VAT.

The bill is also expected to target several key aspects of cryptocurrency transactions, including:

  • Service Fees: Any charges associated with services provided by cryptocurrency platforms, such as trading or withdrawal fees, will be taxed.
  • Operational Costs: Expenses tied to managing cryptocurrency transactions, like administrative or processing fees, are also expected to be subject to VAT.

The specifics of the new tax rates and how they will be applied remain unclear, and detailed information has yet to be released. However, speculation suggests that certain elements of crypto transactions could see more targeted taxation in the coming months.

Why the Nigerian Government Introduced the Bill

The Nigerian government’s timing is strategic. Over the past few years, Nigeria’s crypto market has boomed, with crypto transaction volume increasing by 9% year-over-year to $56.7 billion between July 2022 and June 2023, according to Reuters. This rapid growth presents both opportunities and risks for the government.

From a revenue perspective, the government sees the cryptocurrency sector as a largely untapped resource. Traditional revenue streams, especially oil, have come under increasing pressure, prompting Nigeria to diversify its income sources. With the crypto market growing quickly, taxing digital transactions offers a new and sustainable source of revenue that aligns with the country’s economic objectives. Notably, the bill is reportedly expected to allow FIRS to achieve its N19 trillion revenue target within 12 calendar months.

At the same time, the government has expressed concerns about the unregulated nature of cryptocurrencies. In the past, authorities linked the rise of digital currencies to illegal activities such as money laundering, tax evasion, and the funding of illicit operations. By introducing this bill, the government aims to mitigate these risks, increase transparency, and create a regulatory framework for a market that has operated in a legal grey area for too long.

The Nigerian government has already begun taking action against “non-compliant” players in the country’s crypto space, including a lawsuit against Binance for tax evasion. The new bill represents another proactive approach to managing these risks while capitalizing on the potential financial benefits.

Implications for Nigeria’s Crypto Ecosystem

Nigeria’s new crypto tax law will have significant implications beyond merely increasing revenue. By establishing a regulated environment for cryptocurrency activities, the government aims to position Nigeria as a stable and predictable market for crypto ventures. This formalization could attract foreign investments and foster innovation in the country’s burgeoning digital economy.

One immediate consequence of the new VAT will be its effect on traders who engage in frequent, low-margin microtransactions. As Olaleye Awe, founder of Alpha Training Lab, rightly pointed out, the impact of these new regulations on smaller traders might be disastrous. A 7.5% VAT on service fees may not seem significant for large transactions, but for users who engage in frequent microtransactions, these costs can add up quickly. 

The added transaction costs may deter smaller traders, potentially reducing overall market activity. It also could push out many who rely on smaller, frequent trades, leading to a less dynamic but possibly more stable market if larger institutional players fill the gap.

For crypto-focused companies in Nigeria, the new tax regulations bring both challenges and opportunities. While increased compliance costs and more complex tax reporting requirements may create short-term burdens, the long-term benefits of a more regulated and stable market are significant. Companies that adapt to the new rules and align their operations with the regulatory framework may benefit from the increased investor confidence and potential influx of foreign capital.

However, it remains to be seen whether this bill will encourage further innovation in the sector or hinder the growth of small players. While larger crypto exchanges may be able to absorb these new costs, smaller companies and individual traders might find it harder to operate under the added tax burden.

While the new tax law is designed to bring order to Nigeria’s rapidly expanding crypto sector, it also opens up potential loopholes. For instance, how will the government ensure compliance among decentralized and peer-to-peer platforms? These platforms operate outside of traditional financial systems, making it harder to track transactions and enforce tax obligations. Without a robust monitoring framework, there is a risk that many traders and platforms could evade taxes altogether.

Another potential risk lies in driving crypto activity into unregulated channels. If traders and companies feel that the tax burden is too high or the regulatory framework is too restrictive, they might shift their activities to underground or offshore exchanges. This would not only hurt the government’s revenue generation efforts but also increase the likelihood of fraudulent or illegal activities.

To better understand Nigeria’s approach, it’s helpful to look at other countries that have imposed taxes on crypto. South Africa, for instance, imposes capital gains taxes on crypto-to-crypto transactions. In the U.S., crypto earnings are treated as property, meaning that capital gains taxes apply when users sell their digital assets for a profit. While these measures have provided clarity, they have also been met with challenges such as tax evasion and difficulties in tracking transactions.

Nigeria could face similar issues, especially since much of the country’s cryptocurrency activity takes place on peer-to-peer platforms, which are harder to regulate. South Africa’s experience shows that it’s possible to tax cryptocurrencies, but it requires robust infrastructure to prevent loopholes and ensure compliance.

Broader Implications for African Markets

Nigeria’s new law could have a ripple effect across Africa. As the continent’s largest crypto market, its regulatory stance will likely influence how other African nations approach the issue. Countries like Kenya and Ghana, which have seen rapid growth in crypto adoption, may look to Nigeria’s new law as a template for their own regulations. 

As mentioned earlier, South Africa already has capital gains taxes on crypto-to-crypto trades, and Nigeria’s new law could inspire similar regulatory efforts across Africa.

A more unified regulatory environment could benefit cross-border crypto businesses and provide a level of legitimacy to digital assets in the broader African market. However, if Nigeria’s tax law proves too restrictive, it could set a precedent for overregulation, potentially stifling the growth of the sector not just in Nigeria but across the African continent.

Final Thoughts

Nigeria’s new crypto tax law represents an important step toward formalizing the digital currency market and generating additional government revenue. However, the question remains: Will this law serve as a significant revenue generator for Nigeria, or will it act as a barrier to the growth of the crypto sector?

Rume Dominic, CEO of VOREM, told local media outlet Daily Trust that he sees the tax rules as a positive step toward integrating cryptocurrencies into the mainstream financial system. He believes that clear regulations, coupled with the taxation of cryptocurrency transactions, could significantly bolster government revenue over time. While challenges may arise, Dominic argues that the long-term benefits outweigh the short-term difficulties.

Another industry expert, Emmanuel Ndubuisi, CEO of Emforex Trading Academy, supports the tax initiative but emphasizes the importance of nurturing the sector.

“We should aim to create a thriving environment for crypto, not just impose taxes,”

he suggests.

“It’s vital that both the industry and the government benefit from these changes.”

In the end, the success of this new tax law will depend on how well Nigeria balances regulation with innovation. If done right, the law could solidify Nigeria’s position as a leader in Africa’s digital economy. However, if mismanaged, it could slow down the growth of one of the country’s most promising sectors.

Disclaimer: This article is intended solely for informational purposes and should not be. considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence. 

 

If you would like to read more market analyses like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community. “Take control of your crypto  portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”

Don't miss out!

Subscribe To Our Newsletter

Receive top education news, lesson ideas, teaching tips and more!
Invalid email address
Give it a try. You can unsubscribe at any time.
Thanks for subscribing!
Share65Tweet41Share11
Previous Post

BTFD Coin’s 5.9K-Bulls Strong Presale Headlines Best Meme Coins for Massive Return Potential As Notcoin Launches ‘Earn’ And Gigachad Spikes

Next Post

$7M Secured with Massive Growth: Why Qubetics Is the Best Crypto to Buy Now as Cardano Whales Accumulate and Polkadot Expands Parachains

Olayinka Sodiq

Olayinka Sodiq

Olayinka Sodiq is a seasoned crypto and blockchain writer with over 5 years experience in the fintech industry. With a deep passion for decentralized technology, Olayinka crafts insightful and engaging content that demystifies complex blockchain concepts for a global audience. His work has been featured in leading publications (Business Insider Africa, Tradingbeasts.com, and The Trading Bible), where he is known for blending technical expertise with a clear, accessible writing style. Olayinka holds a degree in English and is a sought-after speaker at blockchain conferences worldwide

Related Posts

AI-Powered Crypto Trading Bots: Are They Worth the Hype?
Articles

AI-Powered Crypto Trading Bots: Are They Worth the Hype?

7 June 2025
Is the Push to Ban Crypto Mixers an Attack on Financial Privacy?
Articles

Is the Push to Ban Crypto Mixers an Attack on Financial Privacy?

7 June 2025
Multi-Party Computation (MPC) vs. Zero-Knowledge Proofs (ZKPs): Which is the Future of Blockchain Privacy?
Articles

Multi-Party Computation (MPC) vs. Zero-Knowledge Proofs (ZKPs): Which is the Future of Blockchain Privacy?

7 June 2025
What Is Price Slippage in Crypto & How Can You Avoid It
Articles

What Is Price Slippage in Crypto & How Can You Avoid It

4 June 2025

Featured Posts

The Hidden Dangers of Holding Crypto in Exchanges

The Hidden Dangers of Holding Crypto in Exchanges

byOlajumoke Oyalekeand1 others
27 May 2025
0

Should We Put a Price on Everything? The Ethics of Tokenizing Human Actions

Should We Put a Price on Everything? The Ethics of Tokenizing Human Actions

byFaari Labinjo
27 May 2025
0

The Most Influential Figures in Crypto History and Their Impact

The Most Influential Figures in Crypto History and Their Impact

byBobby Okposin
14 May 2025
0

Are Layer 2 Solutions Enhancing Ethereum—or Killing it?

byOlayinka Sodiqand1 others
6 January 2025
0

Beginner’s Guide To Earning Passive Income In Crypto | DeFi Planet

Simple Ways To Earn Passive Income From Your Crypto

byArjun Chandand1 others
1 September 2021
0

Read More

Chain of Thoughts

Are Stablecoins Bank Deposits?

Are Stablecoins Bank Deposits?

byOlu Omoyele
31 May 2025
0

...

DAOs and the Coordination of Human Endeavour

DAOs and The Coordination of Human Endeavour

byOlu Omoyele
27 April 2025
0

...

Should DeFi Be Regulated?

Should DeFi Be Regulated?

byOlu Omoyele
27 March 2025
0

...

Is Tokenization All That It’s Cracked Up To Be?

Is Tokenization All That It’s Cracked Up To Be?

byOlu Omoyele
26 February 2025
0

...

Markets Update

Your Weekend Crypto Roundup | June 2025 (Week 1)

1 day ago

Your Weekend Crypto Roundup | May 2025 (Week 5)

7 days ago

Your Weekend Crypto Roundup | May 2025 (Week 4)

2 weeks ago

Your Weekend Crypto Roundup | May 2025 (Week 3)

3 weeks ago

Your Weekend Crypto Roundup | May 2025 (Week 2)

4 weeks ago

Your Weekend Crypto Roundup | May 2025 (Week 1)

1 month ago
Read More

Events

  • No events
  • Spotlight

    All about Ethereum
    All about Algorand
    All about Bitcoin
    All about Gora

    Press Releases

    AB Launches on Binance

    bychainwire
    7 June 2025
    0

    Nibiru Launches ”Block Party” Aura Program to Reward Real DeFi Activity

    bychainwire
    5 June 2025
    0

    BYDFi and Ledger Launch Global Campaign with Limited BYDFi x Ledger Nano X

    bychainwire
    5 June 2025
    0

    $ZEUS Marking His Territory: Announcing An IP Collaboration with Original Zeus Artist and Trademark Holder

    bychainwire
    4 June 2025
    0

    Huma Joins the Global Dollar Network to Advance Stablecoin Adoption on Solana

    bychainwire
    4 June 2025
    0

    Read More

    ADVERTISING

    ABOUT

    TEAM

    CAREERS

    CONTACT

    TERMS & CONDITIONS

    PRIVACY POLICY

    © Copyright 2025 DeFi Planet

    Welcome Back!

    Login to your account below

    Forgotten Password?

    Retrieve your password

    Please enter your username or email address to reset your password.

    Log In

    Add New Playlist

    No Result
    View All Result
    • News
      • People
      • Business
      • Crime
      • Regulation
      • Crypto
      • CBDC
    • Markets
      • Bitcoin
      • Ethereum
      • Stablecoins
      • Altcoins
      • Crypto ETFs
      • Memecoins
    • Policy
    • Articles
      • Press Releases
      • Opinion
      • Explainers
      • Guest Post
      • Sponsored
    • Directory
      • Companies
      • People
      • Products
      • Wallets
    • Multimedia
      • Videos
      • Podcasts
    • Learn
      • DeFi Basics
      • Tutorials
      • Reviews
      • Blockchain Fundamentals
    • Research
      • Case Studies
    • Explore
      • DeFi
      • Crypto Gaming
      • NFT
      • DAO
      • Metaverses
    • Jobs
    • Markets Pro
      • DeFi Planet Pro
      • Spend Crypto
      • Swap Crypto
      • Coin Prices
      • Crypto Exchanges
      • Crypto Analyzer

    © Copyright 2024 DeFi Planet   |   Terms & Conditions   |   Privacy Policy

    -
    00:00
    00:00

    Queue

    Update Required Flash plugin
    -
    00:00
    00:00