After Kenya, Its Nigeria Moving To Tax Cryptocurrency Transactions
Young Nigerians are responsible for the largest volume of cryptocurrency transactions outside the United States. As such, the country has the largest digital asset market in the African continent. Unsurprisingly, the Nigerian government has plans to begin taxing cryptocurrencies and other virtual assets.
According to Zainab Ahmed, the country’s finance, budget, and national planning minister, the process will begin in 2023 should the proposed Finance Bill 2022 be approved for implementation.
The bill is generally meant to help the West African country achieve rudimentary policy drivers to address equity tax, climate change, economic growth, and other key considerations, including job creation, revenue generation, tax incentives reform, and tax administration.
The Finance Bill 2022 looks to provide some clarification on how crypto and digital asset transactions can be taxed in alignment with the government’s efforts to enhance cross-border and international taxation.
The draft is being updated by the National Economic Council to entertain the concerns of state governors and will be passed to the Federal Executive Council, after which it will proceed from the president to the national assembly.
Recall that in February of 2021, the Central Bank of Nigeria (CBN) officially took crypto off the table, directing banks to close down the accounts of customers who indulged in virtual asset trade.
The situation seemed to have however gotten [a little] better in April 2022 when the country’s Security Exchange Commission (SEC) decided to regulate crypto, particularly on the basis of a Virtual Asset Service Provider (VASP) license concerned providers would have to secure before operating legally.
In September, it came to light that the country is working on launching a digital city, one which would provide friendly laws, regulations, and tax incentives for crypto-driven ventures. Nigeria looks to follow in the steps of Dubai to create a virtual free economic zone to lure in crypto ventures from all over the world.
Last month, lawmakers in Kenya were in the middle of deciding whether or not to move ahead with taxing crypto transactions in the East African country. The Capital Markets (Amendment) Bill 2022 would allow the nation to bring crypto exchanges and digital wallet providers into the tax net.
According to the bill, crypto investors in the country would pay capital gains tax into the coffers of the Kenya Revenue Authority whenever they sell or use crypto for business dealings. Also, such investors are required to report to the Capital Market Authority, the nation’s financial watchdog, regarding the details of their crypto ownership.
“The amendment will provide for specific provisions to govern digital currency transactions in Kenya, including the definition of digital currencies, its creation through crypto mining, and provide for regulations around the trading of digital currencies,” said the bill’s [lead] sponsor, Mosop MP Abraham Kirwa.
Nigeria and Kenya are easily two of Africa’s largest crypto markets, perhaps on the back of being two of the biggest economies in the continent. The former has 33.4 million crypto owners or traders, while the latter boasts 4.25 million users.
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