The Minister of Finance, Budget and National Planning, Zainab Ahmed, has announced the Federal Government’s plan to tax cryptocurrency and other digital assets in line with the provision of the 2022 Finance Bill. This is coming more than a year after the Central Bank of Nigeria prohibited all regulated financial institutions from carrying out cryptocurrency transactions.
Zainab made this known at the virtual National Executive Council (NEC) meeting presided by Vice President Yemi Osinbajo on Thursday.
Media aide to the vice president, Laolu Akande, said in a tweet that NEC “resolved to update draft with additional inputs from State Governors as the bill goes forward to the Federal Executive Council (FEC).”
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The minister, who had earlier advocated the need for Nigeria to introduce digital taxation as a means to boost revenue generation, said that five fundamental policy drivers have been factored in the bill. She named the drivers as tax equity, climate change, job creation/economic growth, tax incentives’ reform and revenue generation/tax administration.
She explained that the policy drivers as contained in the bill will help the government in achieving its strategic goal of increasing cross-border and international taxation of expanding e-commerce with emerging countries.
“For instance, under the Tax Equity pillar, all sectors of the economy would be brought into the tax net including Capital Gains Tax from digital assets, cable undertakings, lottery and gaming business.
“Under the pillar of Tax Incentives’ Reforms, there would be new deductions for Research and Development, and Investment Tax Credits; Reconstruction Investment Allowance; Rural Investment Allowance; Incomes in Convertible Currencies to be exempt, among others,” Ms Ahmed in the statement said.
She said that the bill sought to amend relevant taxes, excises and duty statutes in line with the macroeconomic policy reforms of the federal government. In addition, the bill also seeks to amend and make further provisions in specific laws in connection with the public financial management of the federation, she said.
Ahmed explained that the bill also makes provision for incentive and protection of some assets.
“Similarly, under the Climate Change and Green Growth pillar of the bill, there would be incentives for the natural gas sector and discouragement of gas flaring.
“Also the bill contains an amendment under Chargeable Assets stating that “subject to any exceptions provided by this Act”, all forms of property shall be assets for this Act, whether situated in Nigeria or not, including options, debts, digital assets and incorporeal property generally,” she said.
She added that the digital regime would place Nigeria in the league of jurisdictions currently taxing digital assets, including the UK, the US, Australia, India, Kenya and South Africa.
However, the development has opened a fresh discussion about cryptocurrency and other digital assets that Nigerian regulators are currently frowning at.
Besides issuing a directive to financial institutions to abstain from crypto-related transactions, the CBN has also warned Nigerians to avoid trading or holding crypto assets. The financial regulator had earlier in the year ordered banks to freeze accounts found making any sort of crypto transactions. This poses the question: Will the central bank approve cryptocurrency in Nigeria based on the digital tax policies of the finance bill?