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FG Plans To Tax Cryptos, Other Digital Assets

Zainab Ahmed, minister of finance, budget and national planning, says there is a provision to tax cryptocurrency and other digital assets in the 2022 finance bill.

According to a statement released by Laolu Akande, spokesperson to Vice-President Yemi Osinbajo, Ahmed updated the national economic council (NEC) on the main features of the bill at an extraordinary virtual meeting on Thursday.

The minister said the proposed bill is anchored on five fundamental policy drivers.

She listed the drivers as tax equity, climate change, job creation/ economic growth, tax incentives’ reform and revenue generation/tax administration.

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.

According to Ahmed, the bill also aims to amend and make further provisions in specific laws in connection with the public financial management of the federation.

She said other aspects of the finance bill include chargeable assets; exclusion of losses and replacement of business assets.

“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,” the statement quoted Ahmed as saying.

“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.

“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.

“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.”

The minister said the proposed bill clarified the taxation of cryptocurrency and other digital assets in line with the government’s policy thrust of enhancing cross-border and international taxation of growing e-commerce with emerging markets.

She said that by doing so, Nigeria would join the league of jurisdictions currently taxing digital assets, including the UK, the US, Australia, India, Kenya and South Africa.

After Ahmed’s presentation, the governors of Sokoto, Borno, Kaduna, Kebbi and Ogun states, among others, commented on the bill.

Following their comments, the NEC resolved to update the draft finance bill with additional inputs from state governors as the bill goes ahead to the federal executive council (FEC) before the president sends it to the national assembly.

In 2021, the Central Bank of Nigeria (CBN) directed banks to close accounts of persons or entities involved in cryptocurrency transactions within their systems.

The apex bank further urged citizens to desist from crypto assets, warning that they are used to fund illegal dealings.

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