Crypto Tax: Digital Assets Coalition Urges FG to Drop Transaction Charges, Tax Profits Instead
- Digital Assets Coalition urges Nigeria to revise taxing policies on virtual assets to avoid stifling crypto adoption
- New guidelines proposed by Nigeria Revenue Service could unfairly burden ordinary users and drive transactions underground
- Coalition highlights successful profit-based tax models from countries like the UK and Brazil to enhance revenue generation
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
The Digital Assets Coalition (DAC) has urged the Nigeria Revenue Service (NRS) to revise its proposed taxation guidelines for virtual assets, warning that the current framework could discourage crypto adoption, drive transactions underground, and ultimately reduce government revenue.
In a newly released position paper titled Tax the Profit, Not the Movement of Money, the coalition said it supports taxing profits made from cryptocurrency investments but opposes taxes imposed on every crypto transaction regardless of whether investors make gains or losses.
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Coalition backs taxation, but wants fairer approach
The coalition stressed that it is not against taxation of digital assets. Instead, it believes Nigeria should adopt a system that taxes actual profits while maintaining strict registration and reporting requirements for crypto platforms.
According to the paper, Nigeria's growing digital asset market should contribute to government revenue, but taxing every movement of funds rather than investment gains would unfairly burden ordinary users and businesses.
Concerns over stamp duty and withholding tax
DAC's biggest objections are the proposed 1.5% stamp duty on every conversion between naira and digital assets and the 1% withholding tax on the total value of crypto sales.
The group argued that these charges apply even when investors suffer losses or simply transfer funds without making any profit. It warned that the transaction costs could exceed exchange fees by several times, making regulated Nigerian platforms less attractive than offshore alternatives.
Ordinary Nigerians could bear the burden
The coalition said the proposed framework would affect more than crypto traders. It cited examples of families sending money abroad, small importers paying overseas suppliers, freelancers receiving payments in stablecoins and students earning modest crypto rewards.
According to the paper, these users could face taxes on remittances, business payments and income that has already been taxed, while also dealing with increased compliance requirements.
Lessons from India, Kenya and Turkey
DAC also pointed to international examples, claiming that similar transaction-based crypto taxes in India, Kenya and Turkey either failed to generate expected revenue or were eventually repealed or withdrawn after driving trading activity to offshore platforms.
The coalition argued that countries such as the United Kingdom, South Africa and Brazil instead focus on taxing investment gains rather than the movement of digital assets.
Source: Facebook
Recommendations to the government
Among its recommendations, the coalition called on the NRS to postpone implementation of the guidelines, hold wider stakeholder consultations, remove taxes on crypto transactions, collect taxes only in naira, protect small users through exemptions and retain registration and reporting obligations for exchanges.
It maintained that a profit-based tax regime would raise more sustainable revenue, improve compliance and keep Nigeria's fast-growing crypto sector within the formal economy rather than pushing it offshore.
NRS unveils compulsory rules for Nigerians opening crypto accounts
Legit.ng earlier reported that the NRS has ordered cryptocurrency exchanges and other Virtual Asset Service Providers (VASPs) to collect a valid Tax Identification Number from customers as a condition for opening accounts on their platforms.
The directive comes from the Guidelines on the Taxation of Virtual Assets, which the NRS published on Monday, August 3, as part of a new regulatory framework covering cryptocurrencies, stablecoins, tokenised assets and other digital assets.
Under the new rules, platforms including crypto exchanges, wallet providers, trading platforms and peer-to-peer escrow operators must confirm a customer's Tax ID before that account can go live.
Source: Legit.ng
