3 January 2023

Taxation Of Crytpocurrency Under The 2022 Finance Bill

Pavestones Legal


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In our previous article, we highlighted some of the proposed amendments/reforms to the various tax laws in operation in Nigeria under the 2022 Finance Bill (the "Bill"). Some of the highlights...
Nigeria Tax
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In our previous article, we highlighted some of the proposed amendments/reforms to the various tax laws in operation in Nigeria under the 2022 Finance Bill (the "Bill"). Some of the highlights of the Bill include taxation of digital assets, taxation of gaming and gambling companies, tax increase for flaring companies, and rollover relief on shares and stocks, amongst others.

In this article, we will be examining the provisions of the Bill on the taxation of digital assets and its implications on businesses and individuals should the provision be maintained upon enactment of the Act.

Provision of the Bill

Section 3 of the Bill provides as follows:

Section 3(a) of the Capital Gains Tax Act ("CGTA") is amended by inserting the phrase "digital assets" after the word "debt" as follows-

"subject to any exceptions provided by this Act, all forms of property shall be assets for the purposes of this Act, whether situated in Nigeria or not, including- options, debts, digital assets, and incorporeal property generally"

By the above provisions, digital assets which include cryptocurrency are considered property or asset and are made subject to the provisions of the CGTA.

The justification for this provision according to the Bill is to provide clarifications on the basis of taxing cryptocurrency and other digital assets in line with the government's efforts at enhancing cross-border and international taxation of growing e-commerce with the emerging markets. Upon enactment and implementation of this provision, Nigeria will become one of 3 African countries to impose tax on cryptocurrency.

Implications of the Provision of the Bill

  1. Capital gains tax at a flat rate of 10% shall apply to all gains (after making such deductions as are allowed in the computation of the gains) made following a disposal (i.e sale, transfer, assignment, compulsory acquisition, etc.) of all or any part of cryptocurrency held by any individual to whom the Personal Income Tax Act ("PITA") or legal entity in any year of assessment. This shall be in addition to the tax obligations that may be imposed under PITA;
  2. The owner or dealer in cryptocurrency shall have the obligation to report every cryptocurrency transaction and disposal made by him in the particular year of assessment.


An attempt by the government at bringing cryptocurrency transactions under its tax net has been long anticipated, especially following the Securities and Exchange Commission's (SEC) moves to regulate cryptocurrency and other digital assets. However, it is expected that the government and relevant tax authorities may experience some challenges in enforcing this provision, especially with the anonymous nature of cryptocurrency transactions. We expect that upon enactment of the Bill into law, further directives and guidelines on compliance by individuals and companies will be issued by the relevant authorities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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