The Nigerian revenue authority has implemented extensive regulations on cryptocurrency taxation, requiring exchanges and operators of peer-to-peer marketplaces to collect, report, and remit taxes arising from virtual asset transactions.
Summary
- Exchanges are mandated to withhold 1% on taxable crypto disposals, while transactions involving stablecoins are exempt as per the guidelines.
- Income generated from staking, mining, airdrops, and DeFi activities may be subject to a 10% withholding tax if deemed taxable income.
- Conversions between fiat and tokens incur a 1.5% stamp duty, which is to be collected by the involved platforms and marketplaces.
- Certain withheld taxes must be paid using the original tokens, and VAT is to be settled in the currency of the transaction.
- The framework designates exchanges and P2P operators as crucial players in both reporting and enforcing tax obligations.
The Nigeria Revenue Service released the Guidelines on Taxation of Virtual Assets on July 31, with the public announcement occurring on August 3. This document clarifies how the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 relate to digital assets.
A particularly noteworthy requirement concerns payment methods. Income tax and stamp duty must be remitted to the NRS using the token associated with the transaction, while VAT is to be paid in the currency used for payment, as mentioned in the guidelines.
Nigeria’s Crypto Tax Regulations Shift Collection to Platforms
Platforms must withhold 1% from the proceeds of taxable disposals of cryptocurrencies, security tokens, and relevant non-fungible tokens. This deduction functions as an advance payment toward the taxpayer’s final income tax liability rather than as a separate tax.
Sales of stablecoins are exempt from the 1% withholding requirement. However, this exemption does not completely absolve all potential tax responsibilities from stablecoin transactions; the final tax treatment is influenced by the nature of the transaction, the taxpayer, and any earnings or gains involved.
Rewards from staking, mining, airdrops, and returns from decentralized finance may incur a 10% withholding tax if regarded as taxable income. Platforms and P2P operators are mandated to make these deductions during payment processing.
The regulations also establish a 1.5% stamp duty on conversions between fiat and tokens. The platform or marketplace facilitating the transaction is responsible for collecting this duty from the amount credited to the recipient’s virtual asset.
Tax Liabilities Dependent on Asset Usage
Nigeria has shifted from treating all crypto gains under the previous standalone 10% capital gains model introduced by the Finance Act 2023. Now, as per the reforms of 2025, profits from digital asset disposals are classified as part of taxable income, subjected to the applicable rates for the taxpayer.
Generally, companies not classified as small businesses face a 30% income tax rate on taxable profits and gains. A small business is defined broadly as one with an annual turnover not exceeding ₦100 million and fixed assets below ₦250 million. Individual taxpayers are subject to progressive personal income tax rates.
Taxable events encompass selling, exchanging, or transferring an asset that results in a change in beneficial ownership. Payments made in crypto for goods or services must be valued at their market price on the transaction date and reported as taxable income. The NRS mandates valuations from recognized trading platforms.
Simply holding Bitcoin or another token does not constitute a tax event. Transfers between wallets owned by the same individual are not taxed when the beneficial ownership remains unchanged. Exemptions include minting an NFT prior to its sale, obtaining a crypto-based loan, and locking tokens for staking before earning rewards.
Exchanges Required to Link Transactions with Tax Identities
Providers of virtual asset services must register for tax purposes and maintain detailed records showing acquisition dates, costs, disposal values, fees, and counterparties involved. They are also required to submit information that allows the NRS to identify taxable transactions and users.
As previously reported by crypto.news, the Nigeria Tax Administration Act mandates that registered platforms link customer activity to Tax Identification Numbers and, when applicable, National Identification Numbers.
Required reports may include customers’ names, addresses, telephone numbers, email addresses, and transaction values. Platforms are also obliged to report any significant or suspicious activities and retain identification and transaction records for a minimum of seven years.
This framework explicitly applies to P2P marketplace operators, addressing the potential oversight that could arise if buyers and sellers transact via a matching platform instead of a traditional centralized exchange.
Nigeria’s Broader Crypto Framework is Still Evolving
President Bola Tinubu directed the NRS to implement the tax policy through an executive order dated July 18. This order established a Virtual Asset Council, chaired by the Central Bank of Nigeria, with the NRS and the Securities and Exchange Commission as vice chairs.
In related updates reported by crypto.news, the council aims to coordinate existing regulatory bodies rather than replace them. The SEC maintains authority over securities-related assets, while the central bank oversees payment systems, settlements, and custody services for non-security assets.
The Senate of Nigeria is currently reviewing the Virtual Asset Service Providers Regulation Bill 2026. This bill has progressed to its second reading as of June and is now in the Senate Committee on Capital Market. If passed, it would create licensing and compliance regulations for exchanges and other digital asset businesses.
The onus now rests with exchanges and P2P operators to adapt their transaction systems, customer records, and remittance processes to adhere to NRS requirements. Further guidance may be necessary concerning token custody, conversion protocols, and the agency’s methods for receiving and accounting for taxes paid in various digital assets.
