The Nigerian Federal Inland Revenue Service (FIRS) is gearing up to implement new legislation aimed at taxing the rapidly expanding crypto sector in the country. This move, as reported by Business Day, comes as a means to boost economic growth and foster innovation within the industry.
FIRS Executive Chairman, Zacch Adedeji, highlighted the need for updating Nigeria’s existing regulatory framework to accommodate new technologies that have not been previously addressed by current laws. Adedeji’s special adviser on media, Dare Adekanmbi, stressed the importance of enacting a law to regulate this area of the economy in a manner that is conducive to Nigeria’s economic development.
Industry experts have long been advocating for the Nigerian government to adopt a tax-oriented approach towards the crypto sector. When financial institutions were banned from engaging with cryptocurrencies in 2021, university professor Tayo Oyedeji suggested that taxation should take precedence over prohibition, emphasizing the potential for Nigeria to generate significant revenue from taxing crypto gains.
As one of the largest crypto markets in Africa, Nigeria’s digital assets market is estimated to be valued at over $400 million, according to the Nigerian SEC Director General Emomotimi Agama. With some crypto platforms already implementing Value-Added Tax (VAT) on transaction fees, such as KuCoin’s recent announcement of a 7.5% VAT charge in Nigeria, the legislative move signifies a crucial step towards formalizing the sector.
The call for crypto regulation in Nigeria has gained momentum in recent times, with Finance Minister Wale Edun urging the Securities and Exchange Commission (SEC) to provide clear regulatory guidelines for the industry. This call comes in the wake of a crackdown on crypto platforms, resulting in major players like OKX exiting the Nigerian market. Furthermore, Binance is facing legal challenges from Nigerian authorities over allegations of money laundering and tax evasion, with one of its executives, Tigran Gambaryan, currently under detention in Abuja.
Nigeria’s forthcoming legislation to tax the crypto sector reflects a growing trend towards regulatory clarity and financial oversight within the digital asset space. By taking proactive steps to formalize and regulate the industry, Nigeria is not only positioning itself for economic growth but also signaling its commitment to fostering innovation and compliance within the rapidly evolving realm of cryptocurrencies.
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