In February 2024, Nigerian authorities detained two executives of the cryptocurrency exchange Binance, Tigran Gambaryan and Nadeem Anjarwalla, garnering widespread global attention. The incident stemmed from accusations by the Nigerian government that Binance facilitated $26 billion in "inadequately identifiable" fund flows in 2023, activities suspected of money laundering, currency manipulation (which devalued the Nigerian naira), and tax evasion. The Nigerian government pressured Binance to pay a substantial fine and provide information on its top 100 users, including their trading history from the previous six months. At the time, the incident was interpreted as a sign that Nigeria was hostile to crypto assets.
However, in the face of the rapid development of the crypto market, the Nigerian government's attitude has undergone a transformation from strict restrictions to gradual acceptance, and the regulatory framework and tax policies have also evolved accordingly. On the one hand, regulators are committed to establishing a sound legal system to maintain financial stability and investor protection; on the other hand, tax authorities have begun to include crypto assets in the scope of taxation to prevent tax base erosion. According to Chainalysis' "2024 Global Cryptocurrency Geography Report", as the country with the highest Crypto Adoption Index in Africa, Nigeria's regulatory and tax policy evolution on crypto assets is of great research value. This article aims to explore in depth the tax provisions on crypto assets in Nigeria based on the latest legal documents and regulatory developments in Nigeria, focusing on the analysis of the treatment of income tax, value-added tax and other related taxes, and comprehensively sorting out them in conjunction with the regulatory framework.
II. Nigeria's Crypto-Asset Regulatory Framework
Nigeria's regulatory framework for crypto-assets is formed in a dynamic balance between the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC). Through legal basis and policy documents, a hybrid regulatory system has been gradually established, in which the SEC has statutory regulatory authority and specifically approves crypto-asset-related businesses, while the CBN ensures financial stability and compliance through the banking system.
The Central Bank of Nigeria (CBN)'s position stems from the Central Bank Act 2007, which stipulates that only the CBN can issue currency, and other virtual assets cannot have legal tender status. Based on this, the Central Bank of Nigeria (CBN) issued a circular to banks and financial institutions on February 5, 2021, explicitly prohibiting any activities related to crypto-asset trading, including account opening, payment processing, and collaboration with exchanges, and requiring the closure of identified accounts. However, as global virtual asset regulatory trends evolved, the CBN's stance subsequently shifted. In December 2023, the central bank issued the "Guidelines for the Operation of Bank Accounts for Virtual Asset Service Providers (VASPs)." This permitted banks to open accounts for VASPs, provided they met SEC registration requirements, and provided guidance on AML/CFT compliance, consumer protection, and risk management. This marked the Central Bank of Nigeria's transition from a previous blanket ban to conditional acceptance, marking the beginning of the crypto industry's inclusion in the formal financial system. Meanwhile, the Nigerian Securities and Futures Commission (SEC) began working to establish a regulatory framework for digital assets in 2020. In September 2020, it explicitly stated that virtual assets would be treated as securities and proposed draft rules that would oversee "digital asset issuance platforms, custody, and trading services" under the SEC's supervision. Although its implementation faced obstacles due to the CBN's ban, the "Rules on Issuance, Offering Platforms and Custody of Digital Assets," officially released in May 2022, clearly categorize digital assets into VASPs, DAOPs, DACs, and DAXes. If digital assets are deemed securities, issuers must register with the SEC and be subject to governance, disclosure, capital, and compliance requirements. The rules provide a preliminary regulatory framework for activities involving crypto assets in Nigeria and are applicable to digital assets with securities attributes:
First, the rules define "digital assets" and clarify that they cover virtual asset trading platforms (Platforms) and digital asset custodians (Custodians) with securities attributes, and emphasize that these entities should be subject to supervision under the Investment and Securities Act 2025 (ISA 2025);
Second, according to the rules, any project that wishes to conduct an initial digital asset offering (IDAO) in Nigeria or publicly sell digital assets on the market must submit an application to the SEC and obtain registration approval. Institutions intending to operate digital asset trading platforms or perform custodial functions must also register or apply for the appropriate licenses in accordance with SEC requirements. Third, the rules establish a specific category of "Digital Asset Custodians" and require custodians to be legal entities with minimum capital requirements, technical capabilities, and internal control mechanisms, as well as to fulfill information disclosure and regular audit obligations. Custodians must manage client assets separately from their own assets and perform daily valuations of custodial assets. Fourth, the rules introduce a regulatory sandbox mechanism. The SEC encourages relevant fintech companies to participate in the SEC-led Regulatory Sandbox pilot program to test new digital asset products and services within a restricted scope. The rules state that the sandbox mechanism provides a testing environment for innovative projects with high uncertainty or no existing regulatory pathways. Furthermore, the rules require all regulated digital asset institutions to establish and implement internal control systems for anti-money laundering and counter-terrorist financing, including know-your-customer (KYC) identification, suspicious transaction reporting (STR), and recordkeeping. These requirements, implemented in conjunction with the SEC's 2022 Anti-Money Laundering and Counter-Terrorist Financing Regulations for Capital Market Participants, provide a compliance reference for digital asset-related activities. It is important to note that in the Nigerian regulatory framework, the terms "digital assets" and "cryptoassets" are often used to describe blockchain-based representations of value. However, in official definitions, the terms are inclusive. Digital assets are generally used as a general term to cover all types of tokens (including cryptoassets) and appear in the titles of relevant regulations. For example, the Nigerian Securities and Exchange Commission (SEC)'s 2020 "Statement on Digital Assets and Their Classification and Treatment" categorizes digital assets into four categories, including crypto-assets. Nigerian regulations also clearly distinguish between these two types of assets: Under the SEC's 2022 "Rules on Digital Asset Issuance, Trading Platforms, and Custody," virtual assets are defined as "digital representations of value that can be used for payment or investment purposes and are capable of digital transfer and trading," excluding digital representations of fiat currencies or traditional securities. This definition effectively encompasses crypto-assets such as Bitcoin. In contrast, the rules define digital assets as "a digital token that represents an interest in an asset, such as debt or equity, of the issuer." This suggests that, in the Nigerian regulatory context, crypto-assets generally refer to virtual assets used as a medium of exchange or investment, while digital assets more commonly refer to securities or interests digitized in token form (similar to the on-chain representation of traditional stocks and bonds). While Nigeria's regulatory framework for crypto assets is becoming increasingly clear, specific tax laws and regulations for crypto assets are still under development. While the Federal Inland Revenue Service (FIRS) has yet to issue comprehensive guidance on crypto asset taxation, the 2023 Finance Act and the 2025 Nigerian Tax Act have already included digital assets within the tax framework. Therefore, their tax treatment is primarily based on general principles of existing tax law, inferred from regulatory classifications of digital assets. The following will explore the tax treatment rules and practical logic for different types of crypto assets, focusing on income tax, goods and services tax (GST, or value-added tax), and other taxes. (1) Income Tax Nigeria adopts a principle of combining resident tax jurisdiction with territorial jurisdiction for income taxation. All Nigerian tax residents are required to declare and pay income tax on their global income, or income earned in Nigeria, regardless of source. This principle also applies to crypto-asset-related income. That is, whether individuals or companies, as long as they obtain income from crypto-asset transactions or business in Nigeria, they must pay taxes in accordance with current income tax laws. Under current tax laws, personal income is subject to progressive tax rates, ranging from 7% for annual income of less than 300,000 naira to a maximum rate of 24% (for annual income of more than 3.2 million naira); the corporate income tax rate is 30%. The following analyzes the income tax treatment of crypto-assets based on their different functional attributes: 1. Tax Treatment of Payment-Type Crypto-Assets Payment-type crypto-assets (such as Bitcoin) are primarily used as a medium of exchange for goods and services. Although the Central Bank of Nigeria explicitly denies their status as legal tender, as a tradable digital form of value, they are generally treated as assets or property when generating income and may still be subject to income tax obligations. When an individual or entity disposes of a payment-type crypto-asset and realizes a gain, such gain is generally considered capital gains and is subject to capital gains tax. This gain will also be considered the tax base for personal income tax purposes. If a company frequently trades payment-type crypto assets and its activities constitute a business activity, the resulting profits may be considered business income and subject to corporate income tax at the applicable corporate income tax rate. 2. Tax Treatment of Crypto Assets as Security-Type Crypto Assets Security-type crypto assets represent digital representations of traditional securities (such as stocks and bonds), granting holders rights such as ownership, dividends, and voting rights. The Nigerian SEC has clarified in its "Rules on Digital Asset Issuance, Trading Platforms, and Custody" that such tokens should be regulated as securities and taxed in the same manner as corresponding financial products. First, raising funds through the issuance of security-type crypto assets (commonly known as STOs) is generally considered a securities offering, similar to a company issuing stocks or bonds. Funds raised from the issuance are considered capital income for the issuer and are not included in taxable income (equivalent to the creation of equity or liabilities). Secondly, any income (such as profit dividends, interest, etc.) earned by investors while holding security-type crypto assets is taxable as regular investment income: dividends may be subject to withholding tax, typically at a 10% withholding tax rate in Nigeria; interest income is also taxed as interest income. Finally, when investors sell security-type crypto assets, any capital gains generated are subject to a 10% capital gains tax. Overall, security-type crypto assets are treated similarly to traditional securities for tax purposes: equity is subject to dividend and capital gains tax rules, while debt is subject to interest and bond tax rules, ensuring that crypto investments with security attributes meet the same requirements as traditional investments. (2) Value Added Tax (VAT) Under Nigerian law, all taxable services provided within Nigeria are subject to a standard rate of 7.5%, unless specifically exempted by law. As early as 2020, the then Nigerian Finance Act expanded the definition of "services," clarifying that "services" refer to anything other than goods, currency, and securities. Crypto-asset-related services are not exempt from VAT under the law and, therefore, are taxable services subject to the 7.5% VAT. Amendments to the Nigerian Finance Act in 2019 and 2020 also explicitly include the supply of digital services and intangible assets, such as e-commerce and non-resident digital services, within the scope of VAT. Therefore, VAT is levied only on the service fee portion; the purchase and sale amount of the digital assets themselves is not directly included in the VAT calculation base. For example, if a cryptocurrency exchange charges users fees or commissions for buying and selling Bitcoin, these fees are subject to a 7.5% VAT rate, while the price of the Bitcoin itself is exempt from VAT. Tax authorities consider these fees to be consideration for brokerage/trading services and therefore taxable service income. At the tax authority level, Nigeria's Federal Inland Revenue Service (FIRS) has also recently made clear its stance on the taxation of cryptocurrency trading services. According to a 2024 announcement and media release from the Nigerian tax authority, FIRS has required cryptocurrency platforms to collect 7.5% VAT on service fees charged to Nigerian users. Under Nigeria's current VAT law and official FIRS guidance, cryptocurrency-related service fees are subject to a 7.5% VAT rate. It's important to note that the VAT treatment of crypto-assets used as a means of payment for general goods and services may be controversial: Goods or services purchased with crypto-assets are still subject to VAT according to the nature of the goods or services. For example, if someone buys a computer with Bitcoin, the seller should issue a VAT invoice based on the computer's value (7.5%). Even if the payment was made in Bitcoin, this does not affect the VAT payable on the transaction. According to recent guidance issued by Nigeria's Federal Inland Revenue Service (FIRS), services solely involving the transfer of crypto-assets may be exempt from VAT to reduce transaction costs and encourage the development of digital assets. In other words, if a service solely involves facilitating the transfer of crypto-assets between wallets, the income from such services may be considered tax-exempt financial services for VAT purposes. However, this exemption is still under observation in practice, and the legal basis may derive from the fact that virtual currency transfers are equivalent to money transfer services, thus being included in the list of exempt financial services under the VAT law.
To summarize, in general transactions, the circulation of crypto assets themselves is not subject to VAT, while related service charges are subject to normal taxation. For the purchase and sale of payment-type crypto assets themselves, if they are regarded as commodities, VAT should theoretically be levied. However, considering that many countries exempt crypto assets from VAT by treating them as currencies or financial instruments, Nigeria's final position still needs to be officially clarified. There is currently no clear official document indicating that transactions of crypto assets themselves are subject to VAT, nor is there any clear official document indicating that "crypto asset transfer services" are generally exempt from VAT. This requires further official clarification. (3) Capital Gains Tax In 2023, Nigeria amended the Capital Gains Tax Act, explicitly including "digital assets" in the definition of taxable assets for the first time. According to the 2023 Finance Act, any capital gains accumulated by an individual or enterprise from the disposal of digital assets in a tax year, after deducting allowable costs, shall be subject to a 10% capital gains tax on the net gains. "Assets" here include options, debt, digital assets and general intangible assets. In other words, profits from the sale of virtual currencies such as Bitcoin and Ethereum, or profits from the transfer of NFTs and security-type crypto assets, are all considered capital gains and are subject to a 10% tax rate.
The implementation of the Finance Act 2023 makes Nigeria one of the earliest countries in Africa to explicitly tax gains on crypto assets. According to the general principle of capital gains tax, taxpayers can deduct capital losses incurred in the year against capital gains when filing annual tax returns. However, the Finance Act does not provide more detailed provisions for crypto assets, which may cause uncertainty in tax treatment. For example, the key to calculating capital gains lies in determining the cost basis of the crypto asset, which is generally the full cost paid when the asset was purchased, including the purchase price and any transaction fees. For crypto assets obtained through mining or airdrops, the determination of the cost basis may be more complicated, and the FIRS needs to issue more detailed guidelines to clarify. (IV) Other Taxes Aside from the major taxes listed above, other taxes and fees that may be associated with the cryptoasset sector are currently not significant. Nigeria currently does not have a specific consumption tax on cryptoassets, nor does it impose any net wealth or inheritance tax on cryptoasset holdings. Furthermore, stamp duties that may be imposed during transactions are primarily levied on legal documents and certain transfer procedures and are not directly related to peer-to-peer crypto transactions. If cryptoasset transactions are conducted through banks, ordinary bank transfers are still subject to sporadic stamp duties, but this is unrelated to the cryptoassets themselves. It is worth noting that Nigeria's tax authorities are strengthening the reporting and auditing of crypto transactions. The FIRS has developed technical means to monitor on-chain transactions and requires taxpayers to maintain detailed transaction records, including date, amount, and counterparty, for tax purposes. Enforcement actions against unregistered crypto exchanges in 2024 demonstrate authorities' commitment to cracking down on tax evasion in the crypto sector to strengthen the tax base. Therefore, while there are currently no new taxes tailored for crypto assets, comprehensive recordkeeping and compliance reporting obligations constitute important tax management requirements. Taxpayers should ensure timely declaration and payment of relevant taxes to avoid fines or even criminal liability. IV. Conclusion
Nigeria is undergoing a dynamic evolution in the regulation and taxation of crypto assets. From initial strict restrictions to the gradual establishment of a standardized regulatory framework, the Nigerian government is striving to strike a balance between financial innovation, risk control, and tax fairness. The Central Bank (CBN) and the Securities and Exchange Commission (SEC), as key regulators, have issued guidelines and amended laws to clarify the operating regulations for virtual asset service providers (VASPs) and formally include digital assets within the scope of securities regulation, laying the foundation for subsequent tax collection and administration. In terms of taxation, Nigeria's taxation of crypto assets primarily focuses on capital gains tax and value-added tax. Under the Finance Act 2023 and the Nigerian Tax Act 2025, capital gains arising from the disposal of digital assets are subject to a 10% capital gains tax, providing a clear legal basis for taxing investment income from crypto assets. Furthermore, service fees provided by crypto asset trading platforms are explicitly subject to a 7.5% value-added tax. However, the Federal Inland Revenue Service (FIRS) currently lacks detailed official guidance on the specifics of these tax collection and administration, as well as other taxes theoretically related to crypto assets. From a longer-term perspective, Nigeria's exploration and practice in this area will provide valuable experience and reference for other emerging market countries. With the accumulation of international regulatory experience and the development of domestic practices, Nigeria's crypto tax policy is expected to be further refined and improved, achieving a better balance between encouraging digital economic innovation and ensuring a reasonable tax burden.
Hui Xin
Aaron
Joy
YouQuan
Brian
Alex