Digital-asset operators oppose tax on money movement,demand levy on profits

Digital-asset operators in Nigeria have opposed the taxation of cryptocurrency transactions based on the movement of money, rather than actual profits, warning that the approach could drive users and businesses away from the country’s regulated market.

The Digital Assets Coalition, an industry alliance representing digital-asset operators and participants, raised the concern in its formal position paper on the Guidelines on the Taxation of Virtual Assets, which came into force on August 3, 2026.

The coalition said Nigeria’s estimated $92 billion virtual-asset market, regarded as the largest in Sub-Saharan Africa, could lose significant activity to offshore platforms if transaction-based taxes are implemented without modification.

In its paper titled: “Tax the Profit, Not the Movement of Money”, the coalition said it supports the taxation of virtual assets, but rejected measures that impose charges on transactions regardless of whether users make profits or losses.

It said it supports the taxation of genuine gains, registration of virtual-asset platforms, customer verification and comprehensive transaction reporting, noting that these measures are broadly consistent with regulatory practices in countries such as the United Kingdom, South Africa and Brazil.

However, the group criticised the 1.5 percent stamp duty imposed on every conversion between the naira and digital assets, arguing that the charge is non-refundable and applies irrespective of whether a transaction generates a gain or loss.

It also raised concerns over the one percent withholding tax deducted from the full value of every sale, including transactions where the seller records a loss.

The coalition further objected to provisions requiring taxes to be remitted in digital tokens, rather than naira, arguing that this conflicts with Section 39 of the Nigeria Tax Administration Act, 2025, which provides for payment of taxes in currency.

Spokesperson of the coalition, Obinna Iwuno, said the industry was not opposed to taxation but wanted the system to focus on income and actual profits.

“We support the taxation of virtual assets without qualification. Our concern is with a design choice that taxes the movement of money itself,” Iwuno said.

He warned that the charges could affect students receiving funds from abroad, freelancers converting already-taxed earnings and traders who make losses.

“That is not a tax on profit. It is a toll on participation,” he said.

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The coalition said the impact could be particularly significant for young Nigerians, who account for a substantial proportion of digital-asset users and rely on virtual assets for international earnings, remittances and savings.

According to the group, frequent small-value transactions could cause transaction-based levies to accumulate rapidly, including among users below the N10 million thresholds provided under the Nigeria Tax Act and those within the N800,000 income band subject to a zero percent tax rate.

The coalition warned that excessive taxation of transactions could encourage users and businesses to shift their activities to offshore platforms, weakening Nigeria’s regulated digital-asset ecosystem.

It cited India as an example, arguing that a one percent transaction withholding tax was followed by an 81 percent decline in trading volumes on regulated exchanges within four months, while more than 90 percent of trading reportedly moved offshore within a year.

The group also cited Kenya’s repeal of its three percent transaction tax in 2025 and Turkey’s withdrawal of a similar levy in 2026 as evidence that transaction-based taxation could undermine formal markets.

The coalition urged the Nigeria Revenue Service to defer implementation of the guidelines and undertake broader consultations with industry stakeholders.

It called for taxation based on actual gains rather than transaction values, payment of taxes in naira, a minimum exemption for small earners and the continuation of registration and reporting requirements for digital-asset platforms.

The group also urged the authorities to ensure that tax rates are determined exclusively by the National Assembly.

“This is not a fight against taxation. It is a request for a design that works for citizens and the Revenue Service alike,” Iwuno said.

He added that the coalition remained willing to work with government agencies to develop a tax framework capable of protecting public revenue without discouraging investment and participation in Nigeria’s growing digital-asset economy.