Nigeria's Virtual Asset Tax Rules May Upend Crypto Market

Nigeria's new tax framework for virtual assets could significantly reshape the country's digital-asset market by imposing new collection, reporting, and compliance obligations on Virtual Asset Service Providers (VASPs), according to PwC Nigeria.

The guidelines represent the first comprehensive administrative framework for taxing virtual assets in Nigeria. Under this framework, virtual assets are divided into six categories: cryptocurrencies such as Bitcoin, Ether, and Solana; stablecoins and payment tokens; security and investment tokens; utility and governance tokens; non-fungible tokens (NFTs); and sovereign digital currencies.

The e-Naira and foreign central bank digital currencies are excluded from the virtual-asset tax framework and are treated in the same manner as fiat currencies. The guidelines introduce a 30% income tax rate on applicable gains for companies other than small ones, while individuals are taxed at progressive rates.

Additionally, VASPs are responsible for collecting a one percent withholding tax on gross disposal proceeds for cryptocurrencies, security and investment tokens, and NFTs. They must also deduct 10% withholding tax on passive income from staking, mining, airdrops, and DeFi yields, as well as withhold at five or 10% on professional fees.

PwC warned that enforcement could prove difficult in Nigeria's sizeable informal peer-to-peer market. The firm identified uncertainties surrounding corporate wallet transfers, the yet-to-be-published list of approved price aggregators, and the interaction between withholding tax on gross proceeds and income tax on net gains.