How Nigeria Will Tax Your Crypto Earnings
Nigeria’s government is moving forward with plans to tax earnings from cryptocurrency transactions, a significant development for the country’s burgeoning crypto community. This shift is part of a larger effort to regulate and generate revenue from the digital asset market. Here’s a breakdown of how the new tax regulations will work, as detailed by TechCabal’s “Follow the Money” series.
Understanding Nigeria’s Crypto Tax Regime
The core of the new tax policy revolves around personal income tax applied to profits made from crypto investments. Individuals will be taxed on their capital gains, meaning the difference between the purchase price and the selling price of their cryptocurrency holdings. For instance, if you invested $2,000 (approximately ₦2.93 million) in Bitcoin and later sold it for $4,000 (about ₦5.86 million), your profit would be $2,000 (or ₦2.93 million). Under the new rules, the first ₦800,000 of your profit will be tax-exempt. The remaining amount will be taxed at a rate of 15%. Thus, in this scenario, with a profit of ₦2.93 million, you would pay tax on ₦2.13 million (₦2.93m – ₦0.8m), resulting in a tax liability of ₦319,704 (15% of ₦2.13 million). Conversely, if you sold your Bitcoin at a loss (e.g., buying for $2,000 and selling for $1,500), you would not be subject to any tax. The new law is slated to take effect in January 2026.
In conclusion, the Nigerian government’s move to tax cryptocurrency gains reflects a growing global trend of regulating and incorporating digital assets into existing financial frameworks. While some may view these tax regulations as a burden, they represent a step towards legitimizing and formalizing the crypto market within Nigeria’s economic landscape.
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