ADEDEJI: SANITISING THE CRYPTO WORLD

The FIRS is out to modernise Nigeria’s tax system to incorporate cryptocurrencies, writes Arabinrin Aderonke

As Nigeria dives into the world of digital currencies, one man is stepping up to make sure the country’s tax laws don’t get left behind. Dr Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service (FIRS) has shared in his recent plans to revamp Nigeria’s tax system to change the game for how cryptocurrencies are taxed.

Cryptocurrencies have rapidly gained popularity worldwide, and Nigeria is no exception. With its engagement in digital currency trading, the country faces the pressing challenge of integrating these assets into a coherent tax framework. Current regulations, such as the Stamp Duty Act of 1939, are outdated and inadequate for addressing the complexities introduced by digital currencies. Recognizing this gap, the tax boss is bringing a major update to Nigeria’s tax system to make it fit better with today’s financial realities.

Cryptocurrency has become a major financial phenomenon in Nigeria. With substantial trading volumes and a growing base of users, digital assets like Bitcoin and Ethereum are not just a trend but a growing sector of the economy. This rapid growth presents both opportunities and challenges, highlighting the need for a regulatory framework that can effectively manage the evolving financial world.

Countries around the world are working to figure out how to regulate and tax cryptocurrencies. In the United States, cryptocurrencies are treated as property, and any profits from them are subject to capital gains tax. The United Kingdom and Germany also classify digital currencies as assets and impose capital gains tax on them. Japan has a more detailed approach, taxing cryptocurrency gains based on whether they are considered miscellaneous income or capital gains. These global practices provide useful examples of how different regions are addressing the challenges posed by digital assets.

Dr. Zacch’s changes to Nigeria’s tax system, especially regarding t

his new update on cryptocurrency, bring with it benefits for Nigerians. By setting clear rules for digital assets, these reforms make it easier for people and businesses to understand and meet their tax responsibilities. This clarity helps boost confidence in the cryptocurrency market and encourages more people to get involved. 

The new rules also protect consumers by reducing the risk of fraud and scams, making the market safer. Additionally, better regulation means more tax revenue for the government, which can be used to improve public services and infrastructure. By tackling issues like tax evasion and illegal activities, the changes help create a more stable financial environment. Aligning Nigeria’s tax policies with global standards also helps attract international business and investment. It suffices to say that this move is set to create a more transparent, secure, and thriving financial system for Nigeria.

As the digital economy evolves, keeping tax regulations up to date with technological advancements is important. Dr. Zacch, in his efforts, is taking charge to modernize Nigeria’s tax system to effectively incorporate cryptocurrencies. His approach involves establishing clear, practical guidelines for digital assets, simplifying tax reporting, and leveraging technology to ease compliance.

The tax boss’s commitment ensures that Nigeria’s tax policies adapt to the growing influence of digital currencies. By collaborating with businesses and taxpayers, he aims to build a tax framework that supports innovation while making it easier for everyone to meet their tax responsibilities. As other nations refine their approaches to cryptocurrency taxation, Zacch’s leadership is making the necessary change and keeping Nigeria’s system flexible and responsive to new developments in the digital financial economy.

 Aderonke, an award-winning journalist is Technical Assistant, Broadcast Media at the Federal Inland Revenue Service