How Nigeria Now Taxes Your Crypto, NFTs, and Virtual Assets (For Individuals)

If you are an individual involved in trading cryptocurrencies, minting or selling NFTs, or earning income from staking, it's no longer news that it's time to pay close attention to Nigeria's new tax laws. The government has introduced a comprehensive legal framework that explicitly brings all virtual and digital asset activities under the tax net.

This quick guide breaks down exactly what this means for you, including your tax obligations, the rates you’ll pay, and the steps you must take to remain compliant.

Are My Virtual Assets Taxable?

The short answer is a clear yes. The new laws classify virtual and digital assets as "chargeable assets". This means any profit or gain you make from them is now officially taxable. A "virtual asset" is defined as a digital representation of value and includes cryptocurrencies, tokens, and digital collectibles (like NFTs).

Your virtual asset activities are considered taxable transactions if you are involved in any of the following:

• Selling, exchanging, or transferring virtual assets.
• Earning income from mining or staking activities.
• Receiving assets from airdrops, bounties, or any other form of compensation or reward.
• Using virtual assets as payment for goods and services. If you receive payment in crypto, you must report it as income.

How Your Gains are Taxed: Calculations and Rates

Any profit or gain you make from a virtual asset transaction is now treated as income that is chargeable to tax. This also applies to gains made from the disposal of an asset, which includes selling, leasing, or transferring it. One thing the new tax laws effectively did was eliminate the need to pay capital gains tax separately from income tax. Gains are now treated as part of your total income, which is subject to tax.

How to Calculate Your Taxable Gain: To determine your taxable gain, you simply deduct the original acquisition cost of the asset from the proceeds you received from its disposal. You are also allowed to deduct any incidental costs you incurred while making the disposal.

Valuing Your Assets: The value of a virtual asset for tax purposes is its prevailing market price at the time of the transaction. This price is determined by a recognised virtual asset exchange platform approved by the Nigeria Revenue Service.

The Rule on Losses: This is a critical point. Any loss you incur from a virtual asset transaction can only be deducted from profits or gains you make from other digital or virtual asset transactions. You cannot use your crypto losses to reduce your tax liability from other income sources, like your salary or another business.

What are the Tax Rates? The gains you make from virtual assets are added to your total income for the year, and this total income is then taxed at the same progressive rates as other personal income. After all applicable reliefs are granted, your chargeable income is taxed as follows:

• First N800,000 is taxed at 0%
• The next N2,200,000 is taxed at 15%
• The next N9,000,000 is taxed at 18%
• The next N13,000,000 is taxed at 21%
• The next N25,000,000 is taxed at 23%
• Any income above N50,000,000 is taxed at 25%

The virtual asset service provider you use, which includes exchanges and the like, will also be required to charge you 7.5% Value Added Tax. You may be required to pay this alongside transaction fees going forward.

Your Responsibilities as a Virtual Asset Holder

If you engage in any virtual asset activity, you are legally considered a "taxable person". This status comes with three main responsibilities:

1. Register for a Tax ID: You must register with the relevant tax authority to obtain a Taxpayer Identification Number (Tax ID). This ID is required for all your tax-related correspondence and filings.
2. Keep Detailed Records: You are legally required to maintain detailed books and records of account for all your virtual asset activities. These records must be kept in English and stored for at least six years after the end of the relevant tax year.
3. File Annual Tax Returns: You must report all your virtual asset activities when you file your annual income tax return with the relevant tax authority. Every taxable individual is required to file a return of income each year, declaring income from all sources.

How Crypto Exchanges and Platforms are Affected

The platforms you use for trading and custody services are now regulated as Virtual Asset Service Providers (VASPs). They have been given strict new obligations that increase transparency and directly impact you as a user. VASPs are now required to:

• Obtain a license from the Securities and Exchange Commission (SEC) to operate legally in Nigeria.
• Conduct thorough Know Your Customer (KYC) verification on all clients. This involves collecting your personal identification details and monitoring your transactions.
• Report customer transaction data to the tax authorities. This is the most significant change. VASPs must file returns containing detailed information about their customers' transactions, including your full name, address, Tax ID, National Identification Number (NIN), transaction dates, the type and value of assets involved, and details of any counterparty to the transaction.
• Report large or suspicious transactions to the Nigeria Revenue Service and the Nigerian Financial Intelligence Unit (NFIU) to comply with anti-money laundering laws.

What Happens if You Don't Comply?

The new laws have established clear penalties for non-compliance. Ignoring these new tax obligations can be costly.

• Failure to Register for Tax: You face an administrative penalty of N50,000 for the first month of default and N25,000 for each subsequent month the failure continues.
• Failure to File Tax Returns: The penalty is N100,000 for the first month of default and N50,000 for each month thereafter.
• Failure to Keep Records: If you fail to keep proper books of account, you are liable for a penalty of N10,000.

Conclusion: Be Proactive and Stay Compliant

The new legal framework is a significant development for Nigeria's virtual asset ecosystem. Profits and gains from cryptocurrencies, NFTs, and other digital assets are now unambiguously taxable. As an individual handling these assets, it is essential to understand your duties: register for a Tax ID, maintain meticulous records, and file your tax returns accurately and on time. With the platforms you use now required to report your data, transparency is higher than ever. The best approach is to be proactive and ensure you are fully compliant with the new rules to avoid penalties.