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On the eve of his departure from office, on May 28, former President Muhammadu Buhari signed the Finance Act 2023 into law.
The law introduced a number of tax reforms aimed at modernizing the country’s fiscal system. Among its provisions was the introduction of a 10 percent tax on profits from the sale of digital assets, including cryptocurrencies.
The 2023 Finance Act is a comprehensive piece of legislation designed to increase financial transparency, increase revenue, and promote economic growth. Recognizing the growing importance of digital assets such as cryptocurrencies, the Law aims to include them in the scope of taxation.
In doing so, the Nigerian government seeks to level the playing field and ensure that these assets contribute their fair share to the development of the country. This means that Nigeria recognizes the growing influence and economic potential of digital assets, while ensuring that the tax system keeps up with the changing financial landscape. Cointelegraph reached out to the local crypto ecosystem to understand how the industry and community are accepting the law.
Local crypto expert Barnett Acomolafe of cryptocurrency exchange app M7pay talked about how taxation can be seen as a step towards recognizing cryptocurrencies as legal assets and integrating them into the existing financial and regulatory framework. This is in line with the already existing ban, which was previously reported, the Central Bank of Nigeria banned commercial banks from serving cryptocurrency exchanges back in February 2021.
Another local cryptocurrency expert, who prefers to remain anonymous, said taxing cryptocurrencies can be tricky due to the unique nature of digital assets such as valuation, transaction tracking and international complexities. Governments need to set clear guidelines and provide proper education and support to taxpayers in return. This view seems to have been supported by a large number of cryptocurrency proponents.
Just read that very soon you will all start paying taxes on your cryptocurrency and Forex profits in Nigeria.
10% of your capital gains goes to government . What are we going to get in return?
— CryptoLord NE (@CryptoDefiLord) June 8, 2023
In many cases, governments require the cooperation of cryptocurrency exchanges operating within their jurisdiction to track user capital gains. By working with exchanges, authorities can access transaction data and identify individuals or entities for tax purposes. However, the level of cooperation and specific rules vary from country to country. Some jurisdictions have introduced stricter requirements for exchanges to provide user information, while others may have limited rules or are in the process of developing them.
Related: Nigerian Crypto Company Suspends Withdrawals After BTC and Naira Compromise
Cointelegraph reached out to Binance Africa for a comment on the matter, but received no response as of press time.