Nigeria is one of the countries where crypto has been gaining rapid popularity owing to high inflation and unstable economy. However, the government does not recognise crypto as a legal tender and there are no tax regulations laid out yet. Nigeria started to acknowledge the growing ownership rates by issuing a warning to the citizens regarding risks associated with crypto. In 2021, owing to the risks that cryptocurrency poses, the Nigerian government banned commercial banks from dealing in crypto. However, in 2022, the Finance Bill was passed in Nigeria, making it one of the three countries to officially tax cryptocurrency as capital gains.
Do you have to pay crypto tax in Nigeria?
Yes, under the new taxation rules, disposal of crypto is taxable in Nigeria.
When do you have to pay tax on crypto in Nigeria?
Crypto is taxed as capital gains in Nigeria and therefore, disposal of crypto assets is taxed in Nigeria.
What crypto transactions are taxable in Nigeria?
- Sale of crypto
- Swapping crypto
What are the Crypto Tax Rates in Nigeria?
Crypto is taxed at a flat rate of 10% in Nigeria.
Nigeria Income Tax Brackets (2023)
|Annual income (NGN*)||Personal income tax (PIT) rate (%)|
Nigeria Capital Gain Tax Rates (2023)
Capital Gain Tax rates are subject to 10% tax in Nigeria.
How is Tax Calculated on Cryptocurrency in Nigeria?
While the bill is a welcome step, it is still not defined how to determine the value of capital gains. Globally, in order to determine your cost price, two methods can be used: FIFO (First In First Out) and ACB (Average Costs Basis) are used.
According to FIFO Method, you sell your oldest acquired coin first and cost is calculated according to the respective prices at which the coin was bought. Whereas, in ACB, time of buying doesnt matter and average cost is taken into account.
Let’s take an example,
Say you bought 2 BTC for NGN 20,000 in 2020 and 4 BTC for NGN 60,000 in 2021. Then you sold 4 BTC in 2022 for NGN 1,00,000:
- FIFO METHOD
You sell 2 BTC from 2020 and 2 BTC from 2021. So cost price is:
= 20,000 + (2/4)*60,000
= NGN 50,000
Profit = 1,00,000 – 50,000
Here, taxes are levied on NGN 50,000 .
- ACB METHOD:
All coins are of the same denomination. Therefore, cost price for one coin:
= (20,000 + 60,000)/6
= NGN 13,333
So, cost price of 4 coins:
= NGN 53,333
Profit = 1,00,000 – 53,333
Here, taxes are levied on NGN 46,666.
Is there any Crypto Tax Free in Nigeria?
Buying crypto is free of taxes in Nigeria.
Crypto Tax in Nigeria – FAQs
Do you have to pay tax when you buy crypto in Nigeria?
No, you dont have to pay taxes when buying crypto in Nigeria.
Do you have to pay tax when you sell crypto in Nigeria?
Yes, you have to pay tax when you sell crypto in Nigeria
Do you have to pay tax when transferring crypto in Nigeria?
Yes, you have to pay tax when transferring crypto in Nigeria
Do you have to pay tax when spending crypto in Nigeria?
Yes, you have to pay tax when spending crypto.
Is swapping crypto taxable?
Yes, crypto swapping is taxable.
How much tax on crypto gains in Nigeria?
How do I avoid capital gains tax on crypto in Nigeria?
Losses and expenses are deductible from taxation. Therefore, tax amounts can be reduced in such ways.