Nigeria Introduces Taxation on Cryptocurrencies: A Surprising Turn in Government’s Stance

Bitcoin and other cryptocurrencies have been a subject of debate and regulatory scrutiny globally, and Nigeria has been no exception. In February 2021, the Central Bank of Nigeria (CBN) issued a circular instructing financial institutions to close accounts involved in cryptocurrency transactions, citing concerns over money laundering, terrorism financing, cybercrime, and the volatility of cryptocurrencies.

However, in a surprising shift, the Nigerian government has now introduced taxation on cryptocurrencies. The decision aims to harness the growing adoption and economic significance of digital assets for revenue generation. Nigeria joins other jurisdictions, such as the UK, US, Australia, India, Kenya, and South Africa, in taxing digital assets.

Here’s a timeline of key events shaping Nigeria’s evolving stance on cryptocurrencies:

  • February 2021: CBN directs banks to close accounts involved in cryptocurrency transactions.
  • July 2021: CBN announces plans to launch the “eNaira,” a central bank digital currency.
  • October 2021: Nigeria becomes the first African nation to launch a digital currency, the “eNaira.”
  • May 2022: The Securities and Exchange Commission (SEC) recognizes digital assets as securities and issues regulations.
  • December 2022: The finance bill includes provisions for taxing cryptocurrencies and digital assets.
  • May 2023: President Muhammadu Buhari signs the 2023 finance bill into law, introducing a 10 percent taxation on gains from the disposal of digital assets.

The government’s decision to tax cryptocurrencies signifies a significant change in its approach and recognition of the economic potential of digital assets.

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