Nigerian Government Shifts Ground On Cryptocurrency, Set To Tax Digital Assets

By Dayo Adesulu December 2, 2022Last Updated: December 2, 2022

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The Nigerian government has shifted ground on cryptocurrency’s ban as it has included the digital assets for taxation in the Finance Bill 2022.

The Finance Bill 2022 noted that it would include capital gains tax on digital assets, cable undertakings, lottery and gaming businesses, and other areas of the economy in the tax net.

The bill also includes an amendment under Chargeable Assets that states that “subject to any exceptions provided by this Act, all forms of property, whether located in Nigeria or not, shall be assets for the purposes of this Act, including options, debts, digital assets, and incorporeal property generally.”

The aforementioned were discussed at an extraordinary virtual meeting of the National Economic Council presided over by Vice President Yemi Osinbajo.

Mr Laolu Akande, the Senior Special Assistant to Vice President Yemi Osinbajo in a statement signed late Thursday let the cat out of the bag.

The statement is titled ‘At NEC meeting, federal government, governors in consultation on proposed 2022 Finance Bill.’ It read in part, “The meeting, which was presided over by Vice President Yemi Osinbajo, SAN, members of the Council were briefed on the main features of the bill by the Minister of Finance, Budget and National Planning, Zainab Ahmed.

“According to the Minister, the proposed Finance Bill 2022 is anchored on five fundamental policy drivers: Tax Equity; Climate Change; Job Creation / Economic Growth; Tax Incentives’ Reform; Revenue Generation / Tax Administration.

“Ahmed added that the bill seeks to amend relevant taxes, excises and duty statutes in line with the macroeconomic policy reforms of the Federal Government and to amend and make further provisions in specific laws in connection with the public financial management of the Federation.”

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‘At NEC meeting, FG, governors in consultation on proposed 2022 Finance Bill,’ reads the statement.

“At the meeting, which was presided over by Vice President Yemi Osinbajo, SAN, members of the Council were briefed on the principal aspects of the bill by Minister of Finance, Budget, and National Planning, Zainab Ahmed,” it read in part.

“The proposed Finance Bill 2022, according to the Minister, is anchored on five basic policy drivers: Tax Equity; Climate Change; Job Creation / Economic Growth; Tax Incentives’ Reform; Revenue Generation / Tax Administration.”

“She said that the bill seeks to update relevant tax, excise, and duty legislation in accordance with the Federal Government’s macroeconomic policy measures, as well as to revise and make additional provisions in certain laws relating to the Federation’s public financial management.”

Other features of the Finance Bill include Chargeable Assets, Loss Exclusion, and Business Asset Replacement.

For example, the Tax Equity pillar would bring all sectors of the economy under the tax net, including Capital Gains Tax on digital assets, Cable Undertakings, Lottery and Gaming Business.

Similarly, the bill’s Climate Change and Green Growth pillar would include incentives for the natural gas sector as well as penalties for gas flaring.

Under the Tax Incentives Reforms pillar, new deductions for R&D and Investment Tax Credits; Reconstruction Investment Allowance; Rural Investment Allowance; and Income in Convertible Currencies would be exempt, among other things.

In addition, the bill includes an amendment under Chargeable Assets that states that “subject to any exceptions provided by this Act, all forms of property, whether located in Nigeria or not, shall be assets for the purposes of this Act, including Options, debts, digital assets, and incorporeal property generally.”

According to the proposed bill, these measures define the foundation for taxing cryptocurrency and other digital assets, which is consistent with the government’s policy goal of improving cross-border and international taxes for developing e-commerce with emerging economies.

Nigeria will thus join the ranks of jurisdictions that now tax digital assets, which include the United Kingdom, the United States of America, Australia, India, Kenya, and South Africa.

Ahmed also stated that substantial consultations on areas of the bill, such as tax avoidance and evasion, had taken place, with the introduction of a broad anti-avoidance path.

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