Nigeria’s government is poised to enact a sweeping reform of its tax laws, including measures to regulate the cryptocurrency sector, with a target implementation date of September 2024. Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service (FIRS), disclosed this plan during a joint session with the Senate and House of Representatives Committees on Finance, where he outlined FIRS’s strategy for 2024.
Adedeji underscored the Federal Government’s commitment to proposing a bill that would revamp Nigeria’s revenue collection system. The bill aims to unify and simplify the tax structure, with a particular focus on establishing a legal framework for the currently unregulated cryptocurrency market in Nigeria. He asserted the importance of crafting regulations that foster financial innovation while promoting the nation’s economic growth, as seen in other countries.
Senator Sani Musa, head of the Senate Committee on Finance, agreed on the need for legal provisions to govern the rapidly expanding cryptocurrency market, which is becoming an increasingly significant revenue source. He anticipates that the Executive will soon introduce a bill that will bring necessary updates, including the repeal and re-enactment of tax laws, to reflect current economic conditions and trends.
Simultaneously, the Securities and Exchange Commission (SEC) of Nigeria is encouraging virtual asset service providers to join its Accelerated Regulatory Incubation Programme (ARIP). This program aims to facilitate the registration process and prepare these entities for the new Digital Assets Rules, which are set to be implemented soon.
The SEC had initially issued rules for crypto and digital asset service providers in May 2022 and proposed revisions to these rules in March 2024. In a related legal matter, the FIRS has filed a lawsuit against the global cryptocurrency exchange Binance, alleging tax evasion on four counts, with the trial set for October 11, 2024.
The regulatory environment for cryptocurrencies in Nigeria is also leading to operational changes within the industry. For example, OKX has halted its operations in Nigeria, and KuCoin has introduced a 7.5% value-added tax (VAT) on its services, citing regulatory changes in the country. Nigeria is part of a broader African movement to regulate digital assets, with countries like Kenya, Ghana, and South Africa also advancing in the development of regulatory frameworks for virtual assets.
