Nigeria has taken a significant step toward comprehensive cryptocurrency regulation with the introduction of new tax legislation that will fundamentally change how digital assets are taxed in Africa’s largest economy.
The Nigerian Tax and Nigerian Tax Administration Acts 2025, signed into law on June 26, 2025, establish a robust framework that treats cryptocurrency gains as taxable income while imposing strict reporting requirements on exchanges.
Major Changes in Nigeria’s Crypto Tax Landscape
The new legislation represents a departure from previous tax approaches, with several key modifications that cryptocurrency users and businesses must understand:
Individual Taxation Structure
Under the updated framework, profits from cryptocurrency transactions will be classified as “chargeable gains” and subject to income tax rates reaching up to 25% for individual traders. This marks a significant shift from the previous 10% capital gains tax established by the Finance Act of 2022.
The change means that any profit realized from selling, trading, or liquidating digital assets will now fall under personal income tax calculations rather than the separate capital gains category.
This integration into the broader income tax system could result in higher tax burdens for active cryptocurrency traders, particularly those in higher income brackets.
Corporate Tax Requirements
Virtual Asset Service Providers (VASPs), including cryptocurrency exchanges and trading platforms, face a 30% corporate income tax on their operational profits. This tax primarily applies to revenue generated through transaction fees, trading commissions, and other service-related income streams.
The corporate tax rate aligns with Nigeria’s standard corporate income tax structure, treating cryptocurrency businesses similarly to traditional financial service providers.
Compliance Requirements and Reporting Obligations
The legislation introduces comprehensive reporting requirements that place significant compliance burdens on cryptocurrency exchanges operating within Nigeria’s jurisdiction.
Mandatory Transaction Reporting
VASPs must provide detailed transaction information to tax authorities, including:
- Complete transaction descriptions and timestamps
- Asset types and values involved in each trade
- Details of virtual asset sales and transfers
- Personal information of transaction participants
- Comprehensive trading histories for tax calculation purposes
This level of reporting creates a transparent ecosystem where tax authorities can track cryptocurrency activities and ensure proper tax collection.
Enforcement Mechanisms and Penalties
The government has established strict penalties for non-compliance. Exchanges failing to meet reporting requirements face administrative penalties starting at ₦10 million for the first month of non-compliance, followed by ₦1 million for each subsequent month of violations.
Beyond monetary penalties, the Nigerian Securities and Exchange Commission (SEC) maintains authority to suspend or permanently revoke operating licenses for non-compliant exchanges. This enforcement mechanism ensures that cryptocurrency businesses prioritize tax compliance to maintain their operational status.
How Nigeria’s Approach Differs from Regional Models
Unlike Kenya’s previously implemented Digital Asset Tax (DAT), which imposed a flat 3% charge on gross transaction values regardless of profit or loss, Nigeria’s system focuses exclusively on actual gains realized from cryptocurrency activities.
Kenya’s DAT, which was ultimately repealed earlier this year due to implementation challenges and market resistance, served as a cautionary example for other African nations developing cryptocurrency tax frameworks. Nigeria’s profit-based approach may prove more sustainable and equitable for market participants.
Implementation Challenges and Regulatory Gaps
While the new framework provides clarity in many areas, several aspects remain open to interpretation, potentially creating compliance challenges for businesses and individuals.
Areas Requiring Further Clarification
The legislation doesn’t explicitly address taxation of cryptocurrency-based investment products such as derivatives, exchange-traded funds (ETFs), or decentralized finance (DeFi) protocols. These instruments may fall under existing capital gains and withholding tax provisions, but specific guidance would benefit market participants.
Additionally, the framework’s reliance on self-reporting creates potential enforcement challenges. While withholding tax mechanisms could address some concerns by requiring exchanges to deduct taxes at the source, the effectiveness of this approach depends on comprehensive implementation across all market participants.
Broader Context of Nigeria’s Cryptocurrency Regulation
The new tax framework represents part of Nigeria’s evolving approach to cryptocurrency regulation. Earlier this year, the government signed the Investment and Securities Act into law, providing additional legal clarity for digital asset operations.
The Nigerian SEC has been actively working to establish a regulated cryptocurrency ecosystem through its Accelerated Regulatory Incubation Program (ARIP). While the commission has issued provisional licenses to exchanges including Busha and Quidax, it recently announced delays in processing new license applications to conduct additional due diligence on applicants.
Nigeria’s comprehensive approach to cryptocurrency taxation signals the government’s recognition of digital assets as a legitimate part of the financial ecosystem.
By establishing clear tax obligations while maintaining reasonable enforcement mechanisms, the framework could serve as a model for other African nations developing their own cryptocurrency regulations.
The success of this initiative will largely depend on effective implementation, clear communication with market participants, and the government’s ability to balance tax collection objectives with fostering innovation in the cryptocurrency sector.
