Is Crypto taxable in Nigeria? What does the law say about Crypto trading?

What does the law say about Crypto taxation in Nigeria

Cryptocurrencies are generally classified as digital assets subject to taxation in Nigeria today.

On May 28, 2023, former Nigerian president Muhammadu Buhari signed the 2023 Finance Act into law, which includes a provision to tax profits on digital assets, including cryptocurrency.

The new law imposes a 10% capital gains tax on the disposal of digital assets, including cryptocurrency. This tax is payable by individuals, businesses, and other entities that are resident in Nigeria. The tax is calculated on the difference between the purchase price of the digital asset and the sale price.

There are a few important things to note about the present cryptocurrency tax law in Nigeria today:

First, the tax is only payable on realized capital gains, which means that it is only payable when the digital asset is sold or disposed of.

Second, the tax is based on the fair market value of the digital asset at the time of disposal.

Finally, the tax is payable in Nigerian naira (NGN) which means the capital gains will have to be converted to Naira while calculating the capital gains.

Implications of the Crypto Tax Law in Nigeria

Here are the implications of the crypto tax law in Nigeria today:

● Cryptocurrency traders in Nigeria are expected to pay taxes on their profits.

● Taxes are payable once the digital assets are sold.

● Taxes are payable only in Nigerian Naira.

● Crypto traders are expected to report their capital gains for proper taxation.

How to calculate cryptocurrency taxes in Nigeria

To calculate your cryptocurrency taxes in Nigeria, you will need to track your capital gains and losses. You can do this by using cryptocurrency accounting software or by manually tracking your transactions.

Once you have tracked your capital gains and losses, you can use the following formula to calculate your capital gains tax:

Capital gains tax = (Capital gains - Capital losses) * Capital gains tax rate

For example, if you made a capital gain of N100 million from the sale of cryptocurrencies in a given year, and you had no capital losses, then your capital gains tax would be N10 million (N100 million * 10%).

How to pay cryptocurrency taxes in Nigeria

To pay your cryptocurrency taxes in Nigeria, you will need to file a self-assessment tax return with the FIRS. You can do this online or by submitting a paper form.

When filing your tax return, you will need to disclose all of your income, including any income from cryptocurrencies. You will also need to calculate your capital gains tax and other applicable taxes.

Once you have calculated your taxes, you can pay them online or by submitting a cheque or bank draft to the FIRS.

Conclusion

The cryptocurrency tax landscape in Nigeria is still evolving. It is important to stay up-to-date on the latest developments and to consult with a qualified tax advisor if you have any questions about the tax treatment of your cryptocurrency investments.