Nigeria is set to introduce new taxes on cryptocurrency transactions, aiming to boost its revenue amid economic challenges. The government proposes a 0.5–1% capital gains tax on profits and a 10% value-added tax (VAT) on exchanges, potentially generating up to 200 billion naira ($250 million) annually.
However, experts caution that high taxation could drive users toward unregulated peer-to-peer (P2P) platforms, complicating enforcement and reducing potential revenue. Nigeria’s substantial informal sector and history of tax evasion present additional hurdles to effective tax collection.
In a related development, Nigeria has filed a lawsuit against cryptocurrency exchange Binance, seeking $79.5 billion for alleged economic losses and $2 billion in back taxes. This legal action underscores the government’s intent to regulate the crypto market and ensure compliance with tax obligations.
While Nigeria boasts Africa’s largest cryptocurrency market, with approximately 22% of its population owning or using crypto assets, the effectiveness of these tax measures remains uncertain. Balancing regulation with the sector’s growth is crucial to avoid stifling innovation and driving activities underground.
