Lagos: The Digital Assets Coalition (DAC) has raised concerns regarding Nigeria’s recently released virtual asset tax guidelines, suggesting that they might drive cryptocurrency activities offshore and hinder youth engagement in the sector. The coalition’s spokesperson, Mr. Obinna Iwuno, articulated these concerns during a media conference held in Lagos on Thursday.
According to News Agency of Nigeria, the DAC supports the taxation of digital assets; however, some elements of the new framework appear to target the movement of funds rather than focusing on actual profits. Iwuno emphasized that while the coalition advocates for taxing gains from virtual assets, customer verification, and stricter reporting for operators, specific aspects of the guidelines impose charges regardless of whether investors profit or incur losses.
Iwuno pointed out the 1.5 per cent stamp duty on conversions between the naira and digital assets, alongside the one per cent withholding tax deducted from the gross value of cryptocurrency sales. He also criticized the requirement for taxes to be remitted in digital tokens instead of naira, stating that Section 39 of the Nigeria Tax Administration Act, 2025, mandates tax payments in recognized currency. He argued that since virtual assets are not legal tender in Nigeria, they should not be treated as such for tax purposes.
The coalition expressed concern that the levy affects remittances to students abroad, freelancers converting earnings already subjected to income tax, and traders who incur losses. Iwuno noted that young Nigerians, many of whom depend on digital assets for freelance earnings and international payments, could be disproportionately impacted by the framework. He described the guidelines as “anti-youth in effect, even if not in intent.”
Highlighting the coalition’s demands, Iwuno urged the Nigeria Revenue Service (NRS) to pause the implementation of the guidelines and engage in consultations with industry stakeholders. He called for a shift from taxing gross transactions to basing taxes on actual gains and suggested exemptions for students and low-income earners involved in small-value transactions. Additionally, he advocated for changes to tax rates to be approved by the National Assembly rather than introduced through administrative notices.
Iwuno referenced global trends, noting that countries which imposed transaction taxes on digital assets often reviewed or reversed such policies. He cited India’s one per cent withholding tax, which led to a decline in trading volumes on regulated exchanges, and Kenya’s repeal of its three per cent transaction tax in 2025 due to limited returns. Turkey withdrew a similar proposal in 2026. He highlighted that in these instances, traders simply moved to platforms beyond regulatory reach.
Countries like the United Kingdom, Brazil, and South Africa focus on taxing profits from virtual assets rather than the movement of funds. Iwuno warned that Nigeria might face similar challenges if the framework remains unchanged, emphasizing that the coalition’s stance is not against taxation but for a design that benefits both citizens and the NRS.
The News Agency of Nigeria reports that the NRS released guidelines on August 3, outlining the taxation of cryptocurrencies, stablecoins, non-fungible tokens, and other virtual assets under the Nigeria Tax Act, 2025. The framework applies to investors, traders, exchanges, wallet providers, and businesses accepting digital assets as payment, with profits from virtual asset sales subject to income tax and companies paying 30 per cent company income tax on taxable profits.
The NRS also imposes a one per cent withholding tax on the sale of cryptocurrencies and other tokens, alongside a 1.5 per cent stamp duty on conversions between fiat currencies and digital assets. Value-Added Tax remains at 7.5% on services from crypto exchanges but not on the digital assets themselves. The authority clarified that holding cryptocurrency, transferring assets between personal wallets, minting NFTs, or receiving crypto-backed loans would not trigger tax.
Taxable activities include selling crypto, swapping tokens, receiving salaries or fees in crypto, mining, staking, DeFi rewards, and NFT sales. The NRS introduced a dollar-based method for calculating taxable gains, focusing on actual investment gain rather than naira depreciation. It requires taxpayers to maintain detailed records of virtual asset transactions for at least six years and warned that non-compliant virtual asset service providers could face fines up to N10 million.