Cryptocurrency Tax and the clarity on Digital Space in Nigeria
The Preamble
The Federal Government plan to impose tax on Cryptocurrency in Nigeria is no longer news; according to Punch Newspaper, the tax on Cryptocurrency will be included in the Finance Bill 2022. The Finance Bill 2022 will bring every sector of the economy into tax net which includes Capital Gains Tax from digital assets, cable undertakings and Gaming Business.
According to the report, the bill which is an amendment under chargeable acts states that 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.
The Minister of Finance, Zainab Ahmed, as reported by tokenpost.com stated that the bill is aimed to change the excise and duty statues; the bill will make provisions that will enable the government to levy on taxes on Cryptocurrency and other digital transaction. As we look into what the Tax might pose to digital economy, we will take a brief look into the cryptocurrency suspension and how the Central Bank of Nigeria declined its funding in the month of February, 2022.
The Unforgotten Story of the Cryptocurrency Ban:
On the 5th of February, 2021, the Central Bank of Nigeria published a circular directing all banks to discontinue the transaction in and with persons dealing in Cryptocurrency. According to its directive, the Central Bank of Nigeria instructed all banks in Nigeria to close the accounts of persons and entities involved in Cryptocurrency transaction within their systems.
The Central Bank of Nigeria cited that the transaction of Cryptocurrency is a tool for terrorism financing, money laundering and financial vices. It is rather confusing that it is the same Cryptocurrency the government are making much effort to impose a tax on.
The plan of the Ministry of Finance to impose tax on the cryptocurrency it suspended alongside CBN raises the question on their honesty on this taxation and why they suspended the transaction in the first instance despite fining Banks such as Access Bank for 500 million, Stanbic IBTC and UBA for 800 million in April 2022 as reported by techcabal.com.
The Question of the Ministry of Finance intention ?
There are economic advantages of the crypto taxation in an economy; it helps to regulate the digital and revenue going into the digital economy. The ban of Cryptocurrency and the tax that the government plan to impose raises the question of the government hidden intention despite the show of dishonesty in its ban.
There is a urge for clarity of what the Federal Government intend with this. As long as we see the economic benefit the Federal Government clarity is important to note on this. As long as the tax will help ease transaction, there is a need for government to come clear on its intention on its original intent following the suspension of cryptocurrency funding.
