Starting from 2026, failing to comply with tax obligations in Nigeria may result in crypto startups losing their licenses, with a potential penalty of ₦10 million.
The Nigerian government has announced new tax laws that will significantly increase compliance and regulatory oversight for crypto operators in the country. These changes, set to take effect in 2026, are part of a broader effort to boost declining revenues and overhaul Nigeria's fiscal framework.
The Nigeria Tax Administration Act, 2025 (NTAA) spells out taxable transactions for Virtual Asset Service Providers (VASPs), including the sale, exchange, or transfer of virtual assets. VASPs are now required to maintain accurate customer information to comply with Know Your Customer (KYC) requirements and records of all customer transactions and identification data for at least seven years after the date of the last transaction.
For companies doing business in Nigeria, tax payment is obligatory, as stated by Dare Adekanmbi, special adviser on media to the FIRS executive chairman, Zacch Adedeji. VASPs that fail to comply with the NTAA provisions will face penalties. An initial penalty of ₦10 million ($6,693) will be imposed in the first month of default, followed by ₦1 million ($669) for every subsequent month.
The Central Bank of Nigeria (CBN) will be responsible for issuing provisional licenses for VASPs starting from August 2024. The Securities and Exchange Commission (SEC) also plays a crucial role in the licensing and regulatory process of VASPs. Licences can be suspended or revoked by the SEC if necessary.
The NTAA also aligns Nigeria's tax laws on digital assets with those of countries like Kenya (10% excise duty) and South Africa (up to 18% tax on crypto returns). VASPs must report large or suspicious transactions to the tax authorities and the Nigerian Financial Intelligence Unit (NFIU).
Nigeria, one of the largest crypto markets globally, has had an uneasy relationship with crypto operators since lifting its ban on banks offering services to them in December 2023. The government aims to leverage the crypto sector to help lift Nigeria's tax-to-GDP ratio from under 10% to 18% by 2027.
In March 2024, the SEC categorised VASPs as cryptocurrency exchanges, peer-to-peer platforms, and over-the-counter desks. In July 2024, KuCoin, a global crypto platform, began charging 7.5% value-added tax (VAT) on transaction fees to comply with the Federal Inland Revenue Service (FIRS)'s requirement.
As the new tax laws take full effect, users can expect higher transaction fees due to taxes, especially VAT. The government's hope is that these measures will help bolster the country's revenue and contribute to the growth of the Nigerian economy.
