Local Stakeholders Say Nigerian Crypto Tax Move Is ‘Premature’

Crypto Regulations in Nigeria

Obinna Iwunna, the president of the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), recently commented on the Finance Act, 2023, signed into law on May 28. Despite its intentions of modernizing the country’s fiscal framework, the act’s introduction of a 10% tax on gains from digital assets, including cryptocurrencies, is seen as premature by Iwunna.

In an interview with Cointelegraph, Iwunna expressed his doubts about the 10% tax on cryptocurrencies, citing the current uncertain climate and the issue with the Central Bank of Nigeria (CBN) instructing commercial banks not to facilitate financial transactions involving cryptocurrencies. He questioned how it’s possible to tax something that is not recognized or defined, emphasizing the need for clarity and enabling infrastructure before imposing taxes.

Iwunna referenced the National Information Technology Development Agency (NITDA) of Nigeria’s definition of blockchain technology through a collaborative effort and the formulation of a national policy. He suggested that a similar approach should be taken when it comes to crypto regulations in Nigeria.

Crypto Regulation in Nigeria

Iwunna stressed that cryptocurrency involves security, currency and technology, which are overseen by the Nigerian Securities Exchange Commission (SEC), Central Bank of Nigeria (CBN) and National Information Technology Development Agency (NITDA), respectively. It is essential to have a unified understanding of cryptocurrency in order for policymakers to create appropriate policies, regulations and taxation measures.

When asked if Nigerian crypto stakeholders have approached the SEC and CBN with their concerns, Iwunna confirmed that they have reached out and are currently awaiting a response. Although some discussions have taken place, no definite decisions have been made.

Acknowledging the government’s ambition to broaden the tax base, Iwunna stated that it is important to ensure that taxation does not impede the growth of the crypto industry. Clarity is sought regarding the implications of taxing and its connection to the recognition of crypto and associated procedures.

According to Iwunna, the lack of consultation, as observed during the E-Naira launch, could hinder adoption of the tax laws. Had there been collaboration with the digital assets ecosystem, the E-Naira could have seen rapid adoption by millions of Nigerians.