1. Introduction

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 for the previous six months. At the time, the incident was interpreted as a sign of Nigeria's hostility toward crypto assets.

However, in response to the rapid growth of the crypto market, the Nigerian government's attitude has shifted from strict restrictions to gradual acceptance, and the regulatory framework and tax policies have evolved accordingly. On the one hand, regulators are committed to establishing a sound legal framework to maintain financial stability and investor protection; on the other hand, tax authorities are beginning to include crypto assets in their taxation to prevent tax base erosion. According to Chainalysis's "2024 Global Cryptocurrency Geography Report," as the country with the highest crypto asset adoption index in Africa, Nigeria's evolving regulatory and tax policies on crypto assets are of significant research value. This article aims to delve into Nigeria's crypto asset tax regulations based on the latest legal documents and regulatory developments, focusing on the treatment of income tax, value-added tax, and other related taxes, and comprehensively reviewing the regulatory framework.

2. Nigeria’s Crypto-Asset Regulatory Framework

Nigeria's regulatory system 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 powers 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 of 2007, which stipulates that only the CBN may issue currency, and other virtual assets cannot have legal tender status. Based on this, the CBN issued a circular to banks and financial institutions on February 5, 2021, explicitly prohibiting activities related to crypto-asset trading, including account opening, payment processing, and collaboration with exchanges, and requiring the closure of identified accounts. However, with the evolving global regulatory landscape for virtual assets, 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 allows banks to open accounts for VASPs, provided they meet SEC registration requirements, and sets out guidance on AML/CFT compliance, consumer protection, and risk management. This marks the CBN's transition from a previous blanket ban to conditional acceptance, marking the beginning of the crypto industry's inclusion in the formal financial system.

At the same time, the Nigerian Securities and Exchange Commission (SEC) has been working to establish a regulatory path for digital assets since 2020. In September 2020, it explicitly stated that virtual assets would be treated as securities, and proposed draft rules that "digital asset issuance platforms, custody and trading services" should be supervised by the SEC. Although its implementation has 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 classified them into VASPs, DAOPs, DACs and DAXs. If digital assets are identified as securities, the issuer must register with the SEC and accept governance, information 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) with securities attributes and digital asset custodians (custodians), 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 wishing to conduct an Initial Digital Asset Offering (IDAO) or publicly sell digital assets in Nigeria must submit an application to the SEC and obtain registration approval. Institutions intending to operate digital asset trading platforms or act as custodians must also register or apply for the appropriate licenses as required by the SEC.

Third, the rules establish a special category of "Digital Asset Custodians" and require custodians to be legal entities with minimum capital requirements, technical capabilities, internal control mechanisms, and to fulfill information disclosure and regular audit obligations. Custodians must manage client assets separately from their own assets and perform daily valuations on custodial assets.

Fourth, the rules introduce a regulatory sandbox mechanism. The SEC encourages relevant fintech companies to participate in the Regulatory Sandbox pilot mechanism led by it to test new digital asset products and services within a restricted scope. The rules point out that the sandbox mechanism provides a testing environment for innovative projects with high uncertainty or no existing regulatory path;

In addition, the rules require all regulated digital asset institutions to establish and implement internal control systems for anti-money laundering and counter-terrorist financing, including customer identification (KYC), suspicious transaction reporting (STR), record-keeping, and other mechanisms. These requirements, implemented in conjunction with the SEC's 2022 Anti-Money Laundering and Counter-Terrorist Financing Rules for Capital Market Participants, provide a compliance reference for digital asset-related activities.

It's important to note that in Nigeria's regulatory framework, the terms "digital assets" and "cryptoassets" are often used to describe blockchain-based representations of value. However, their official definitions are inclusive. Digital assets are often used as a general term to encompass various 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 cryptoassets. 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." These definitions do not include digital representations of fiat currencies or traditional securities. This definition effectively encompasses cryptoassets such as Bitcoin. In contrast, the rules limit digital assets to "a digital token representing an interest in an asset, such as debt or equity, of the issuer." It can be seen from this that in the Nigerian regulatory context, crypto assets generally refer to virtual assets that serve as a medium of exchange or investment target; while digital assets more often refer to securities or equities digitized in the form of tokens (similar to the on-chain representation of traditional stocks and bonds).

3. Basic Research on Nigeria’s Cryptocurrency Tax System

While Nigeria's regulatory framework for crypto assets is becoming increasingly clear, specific tax laws and regulations for crypto assets are still evolving. 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 purview. 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.

income tax

Nigeria adopts a principle of combining resident tax jurisdiction with territorial jurisdiction for income taxation. All Nigerian tax residents' global income, or income earned in Nigeria, regardless of source, must declare and pay income tax. This principle also applies to income related to crypto assets, 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. According to current tax laws, personal income is subject to an excess progressive tax rate of 7% for annual income of less than 300,000 naira, and a maximum tax rate of 24% (for annual income of more than 3.2 million naira); the corporate income tax rate is 30%. The following will analyze the treatment from an income tax perspective based on the different functional attributes of crypto assets:

1. Tax treatment of payment crypto assets

Payment 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 its status as legal tender, as a tradable form of digital value, it is generally treated as an asset or property when generating income and may still be subject to income tax obligations.

When an individual or entity disposes of payment-type crypto assets and realizes gains, these gains are generally considered capital gains and are subject to capital gains tax. These gains will also be considered the tax base for personal income tax. If a company frequently trades payment-type crypto assets and its activities constitute a business, 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 securities-type crypto assets

Security-type crypto assets represent digital forms 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-backed crypto assets (commonly known as STOs) is generally considered a securities offering, similar to a company's issuance of stocks or bonds. The proceeds from the offering are considered capital income for the issuer and are not included in taxable income (equivalent to the creation of equity or liabilities). Second, any income (such as profit distributions, interest, etc.) earned by investors while holding security-backed crypto assets is taxable as regular investment income. Dividends may be subject to withholding tax, typically 10% in Nigeria; interest income is also taxed as interest income. Finally, if capital gains are generated when investors sell security-backed crypto assets, they are subject to a 10% capital gains tax.

In general, the income tax treatment of security-type crypto assets is the same as that of traditional securities in terms of taxation. 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 securities attributes are subject to consistent requirements with traditional investments.

VAT

Under Nigerian law, all taxable services provided within Nigeria are subject to a standard 7.5% VAT rate, unless specifically exempted by law. As early as 2020, the then-current Nigerian Finance Act expanded the definition of "services," clarifying that "services" refer to anything other than goods, currency, and securities. Cryptocurrency-related services are not exempt from VAT under the law and, therefore, are taxable services subject to the 7.5% VAT rate. Revisions 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; the purchase and sale amount of the digital assets themselves is not directly included in the VAT calculation. For example, if a cryptocurrency exchange charges a fee or commission for buying or selling Bitcoin, this fee is subject to VAT at 7.5%, while the purchase price of the Bitcoin itself is not. 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 cryptoasset trading services. According to a 2024 announcement and media release from the Nigerian tax authority, the FIRS has required cryptoasset platforms to collect a 7.5% VAT on service fees charged to Nigerian users. Under Nigeria's current VAT law and official FIRS guidance, cryptoasset-related service fees are subject to a 7.5% VAT rate.

It's important to note that the VAT treatment of cryptoassets used as a means of payment in transactions involving general goods and services may be controversial: Goods or services purchased with cryptoassets 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%). The fact that the payment was made in Bitcoin 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 cryptoassets 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 cryptoassets between client wallets, the income from such services may be considered tax-exempt financial services for VAT purposes. However, this exemption is still under practical observation, 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.

In summary, in general transactions, the transfer of crypto assets themselves is not subject to VAT, while related service charges are subject to normal taxation. For payments involving crypto assets, if they are considered commodities, VAT should theoretically apply. However, given that many countries exempt crypto assets from VAT by treating them as currencies or financial instruments, Nigeria's final position remains to be determined. Currently, there is no clear official documentation indicating that transactions involving crypto assets themselves are subject to VAT, nor is there any clear official documentation indicating that "crypto asset transfer services" are generally exempt from VAT. This requires further official clarification.

capital gains tax

In 2023, Nigeria amended its 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 individuals or corporations from the disposal of digital assets during a tax year, after deducting allowable costs, are 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 considered capital gains and are subject to a 10% tax rate.

The implementation of the 2023 Finance Act makes Nigeria one of the first countries in Africa to explicitly tax gains on crypto assets. Under the general principles of capital gains tax, taxpayers can offset capital losses incurred in the current year against capital gains when filing their annual tax returns. However, the Finance Act does not provide more detailed regulations for crypto assets, which may lead to 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 acquiring the asset, including the purchase price and any transaction fees. For crypto assets acquired through mining or airdrops, determining the cost basis can be more complex, requiring more detailed guidance from the FIRS.

Other taxes

Aside from the major taxes mentioned above, other potential taxes and fees in the crypto-asset sector are not currently prominent. Nigeria currently has no specific consumption tax on crypto-assets, nor does it impose any net wealth or inheritance tax on crypto-asset holdings. Furthermore, stamp duties that may be imposed during transactions are primarily levied on legal documents and certain transfer formalities and are not directly related to peer-to-peer crypto-transactions. If crypto-asset transactions are conducted through banks, ordinary bank transfers are still subject to sporadic stamp duties, but these are unrelated to the crypto-assets themselves. It is worth noting that Nigerian 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, to calculate tax liabilities. Enforcement actions against unregistered crypto exchanges in 2024 demonstrate that authorities will crack 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 that they declare and pay relevant taxes in a timely manner 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 of Nigeria (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 in 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 of 2023 and the Nigerian Tax Act of 2025, capital gains arising from the disposal of digital assets are subject to a 10% capital gains tax, providing a clear legal basis for the taxation of 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 specific administration of these taxes, 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.