Introduction
On 26 June 2025, Nigeria’s president signed four landmark tax reform bills into law, marking a “bold and foundational shift” in fiscal policy. This tax reform repeals and consolidates various existing tax laws, including the Capital Gains Tax Act, Companies Income Tax Act, Personal Income Tax Act, Value Added Tax Act, and Stamp Duties Act, into a unified legislative framework. The Act replaces the Federal Inland Revenue Service with the Nigeria Revenue Service (NRS) and establishes a Joint Revenue Board (JRB) to coordinate tax policy. The objectives includes simplifying compliance, improving transparency, and spurring economic growth by widening the tax base and reducing complexities.
Although it is yet to be gazetted, one of the most noteworthy introductions in the Nigeria Tax Act, 2024, is the explicit recognition and proposed taxation of digital assets. This development creates a clear and comprehensive tax regime for digital assets reflecting a progressive approach by Nigerian regulators towards the digital economy.
Defining and understanding Digital Assets
According to the Act, “digital assets” mean “digital representations of value that can be digitally exchanged, including, but not limited to, crypto assets, utility tokens, security tokens, non-fungible tokens (NFT), such other similar digital representations or derivatives of any of the listed or similar assets, and any other asset as may be defined by the relevant regulatory authority”. This broad definition aims to cover the diverse and evolving landscape of digital value.
Let’s briefly explain some of these categories:
Non-fungible tokens (NFTs): Unique digital items whose ownership is recorded on a blockchain, such as digital art or collectibles, are specifically listed as “non-fungible tokens (NFT)” for taxation purposes.
Crypto assets: These are digital or virtual currencies that use cryptography for security and operate on decentralized networks, typically blockchains.
Utility tokens: These tokens provide users with access to a product or service within a specific ecosystem. They are recognized as a form of “digital representation of value” in the Act.
Security tokens: These digital assets represent ownership in an underlying asset, such as company shares or real estate. Their explicit mention within the definition of “digital assets” signifies their treatment under tax law, especially given their potential classification under existing securities regulations.
Historical Background of the Taxation of Digital Assets in Nigeria
Prior to the Nigeria Tax Act, 2024, the tax treatment of digital assets in Nigeria was largely ambiguous. The Finance Act 2023 had initiated some steps towards taxing digital assets by amending the Capital Gains Tax Act, but the current Act proposes a more fundamental integration into the overall tax system. The repeal of the Capital Gains Tax Act by this Act signifies that all provisions related to chargeable gains, including those for digital assets, will now be governed by the new consolidated law.
Taxation of Digital Assets
The Nigeria Tax Act, 2024, introduces clear provisions for the taxation of digital assets, demonstrating a proactive approach by the government to formalize their place within the tax framework. The major changes introduced in relation to digital assets are discussed below.
Expansion of the Definition of Chargeable Assets
Under the Act, “all forms of property shall be chargeable assets for the purposes of this part, whether situated in Nigeria or not, including… any form of asset, shares, options, rights, debts, digital assets, and incorporeal property generally.” This explicitly includes digital assets as chargeable assets for capital gains tax purposes.
However, there is an important exception related to the disposal of shares in : “gains accruing to a person on disposal of shares in any Nigerian company shall not be chargeable gains where… the disposal proceeds, in aggregate, are less than N150,000,000 and the chargeable gain does not exceed N10,000,000 in any 12 consecutive months.” This threshold provides an exemption for smaller transactions involving shares, which could potentially include certain types of security tokens if classified as shares.
The implication of this expanded definition is that profits or gains derived from digital assets are now subject to various taxes under the Act:
- Personal Income Tax (PIT): Profits or gains from “transactions in digital assets” are explicitly listed as income chargeable to tax for individuals.
- Companies Income Tax (CIT): Profits or gains of any company or enterprise are subject to income tax , and “profits or gains from transactions in digital assets” fall under this broad category.
- Capital Gains Tax (CGT): Gains accruing from the disposal of chargeable assets, which now explicitly include digital assets , are chargeable to tax. The Act outlines the computation of chargeable gains.
- Withholding Tax (WHT): While not explicitly stating WHT on digital assets, the Act refers to the “Nigeria Tax Administration Act” for deduction at source. If digital asset transactions involve payments for services or other taxable activities, WHT provisions from the Nigeria Tax Administration Act would likely apply.
- Value Added Tax (VAT): The Act imposes VAT on all “taxable supplies”. “Services” for VAT purposes include “any intangible or incorporeal (product, asset or property) over which a person has ownership or rights, or from which he derives benefits, and which can be transferred from one person to another“. This broad definition clearly encompasses digital assets, meaning their supply may be subject to VAT at the prescribed rates.
Jurisdictions of Digital Assets
Jurisdiction is critical for determining taxing rights. The Act addresses this by stating that “incorporeal property, including digital assets, is situated in Nigeria where the person who holds direct or indirect beneficial ownership, control or interest over the right or property is resident in Nigeria or has a permanent establishment in Nigeria to which the property is connected.
This means:
- If an individual holding direct or indirect beneficial ownership, control, or interest in digital assets is a resident of Nigeria, those assets are deemed to be in Nigeria for tax purposes, regardless of their physical location globally. A “resident individual” is defined, among other things, as someone domiciled in Nigeria or who sojourns in Nigeria for an aggregate of not less than 183 days in a 12-month period.
- If a company or entity holding digital assets has a “permanent establishment” or “significant economic presence” in Nigeria, the digital assets connected to that establishment or presence are also considered situated in Nigeria for tax purposes. A “permanent establishment” includes a place through which business is wholly or partly carried on, or a person authorized to conduct business on its behalf. “Significant economic presence” is defined to include various digital activities, such as transmitting signals, messages, or data, or providing online services, where profit can be attributed to such activity.
Taxation of Profits from Digital Asset Transactions
The Nigeria Tax Act, 2024, explicitly includes “profits or gains from transactions in digital assets” as income chargeable to tax under Chapter Two, Part I. This broad phrasing indicates that a wide range of activities involving digital assets would generate taxable profits, including:
- Selling or Trading Crypto: Gains realized from the disposition of crypto assets would be taxable.
- Spending Crypto: When crypto is used to acquire goods or services, it is effectively a disposal, and any appreciation in its value at that point would be a chargeable gain.
- Receiving Crypto as Payments: If digital assets are received as remuneration for services or goods, their value at the time of receipt would constitute taxable income.
- Mining, Staking, Masternodes: Profits derived from these activities would likely be categorized as “profits or gains from any trade, business, profession or vocation” or “any other income, profit or gain not falling within the preceding categories”, and thus subject to income tax.
- Airdrops: The Act’s inclusion of “prizes, winnings, honoraria, grants, awards, laurels, etc.” as chargeable income suggests that the value of airdropped digital assets could be considered taxable.
Crucially, the Act also addresses the deductibility of losses. It states that “any loss incurred in any period from sales, disposal or any other transaction in digital assets shall only be deductible against the profit or gain from digital assets“. This means losses from digital asset transactions cannot be offset against other types of income. For companies, a similar provision states: “any loss incurred in any period from sales, disposal or any other transaction in digital assets shall only be deductible in determining the profits from the business relating to digital assets“. Proper record-keeping is therefore essential for both recognizing gains and claiming eligible losses.
The Implication for existing businesses
- Explicit Taxation of Digital Assets: Businesses that deal with digital assets—whether as a core part of their operations or as an investment—now face clear tax obligations. Profits and gains from “transactions in digital assets” are explicitly subject to Companies Income Tax (CIT) and Capital Gains Tax (CGT).
- VAT on Digital Assets: The broad definition of “services” for VAT purposes now includes digital assets. This means businesses that provide, transfer, or exchange digital assets will likely be required to charge and remit VAT on these transactions, which will impact pricing strategies and consumer costs.
- Record-Keeping is Crucial: The Act specifies that losses from digital asset transactions can only be offset against gains from similar transactions. This makes meticulous record-keeping essential for businesses to properly calculate their taxable income and claim eligible losses. Without a robust system to track every transaction, including purchase price, sale price, and associated fees, businesses may be unable to benefit from loss deductions.
- Review of Business Models: Companies whose business models rely on digital assets, such as crypto exchanges, NFT marketplaces, or blockchain technology firms, must re-evaluate their operations to ensure full tax compliance. This includes integrating tax calculation and reporting into their platforms.
- Tax Planning and Structuring: Businesses will need to factor in the tax implications when making decisions about acquiring, holding, or disposing of digital assets. For instance, the CGT exemption on the disposal of shares with proceeds less than N150 million might be relevant for security token issuers, provided those tokens are classified as shares.
- Jurisdictional Considerations: The “significant economic presence” and “residency” clauses mean that foreign companies with digital activities targeting the Nigerian market will be considered to have a taxable presence in Nigeria. This could expand Nigeria’s taxing rights over international digital businesses and require them to register and comply with Nigerian tax laws.
What is Happening in Other African Countries
The trend towards regulating and taxing digital assets is gaining momentum across the African continent. Nigeria’s proposed legislation aligns with similar efforts in other countries:
- South Africa: South Africa has been a frontrunner in Africa regarding crypto regulation by being the first African Country to license cryptocurrency exchanges The South African Revenue Service (SARS) generally treats crypto assets as intangible assets, subject to income tax or capital gains tax depending on the nature of the activity (e.g., trading vs. holding for investment).
- Kenya: Kenya has adjusted its approach to taxing digital assets. Previously, a 3% tax was applied to the gross transaction value of all cryptocurrency transfers, including purchases, sales, and transfers between personal wallets. This system often resulted in excessive costs for Kenyan crypto traders, as the tax was levied on the full amount even in instances of loss-making sales or internal fund movements.
Effective July 1, 2025, Kenya replaced this 3% Digital Asset Tax with a 10% excise duty. This new duty is now applied to fees charged by Virtual Asset Service Providers (VASPs), such as crypto exchanges, wallets, and other related service providers. This significant policy change aims to foster a more supportive and innovative digital asset ecosystem, differing from the previous tax on total transaction value. - Ghana: While historically cautious, Ghana’s central bank and financial regulators have been exploring regulatory frameworks for virtual assets, indicating a likely future move towards taxation once robust regulations are in place. On 10 July 2025, the Bank of Ghana (BoG) issued a Notice requiring all Virtual Asset Service Providers (VASPs) operating within Ghana, whether physically or digitally, to register with the central bank no later than 15 August 2025. This move signals a pivotal shift in Ghana’s regulatory stance on virtual assets and is intended to lay the groundwork for a formal licensing and oversight regime.
These examples demonstrate a broader regional acknowledgment of the need to integrate digital assets into national tax systems, driven by objectives of revenue generation, market stability, and consumer protection.
Conclusion
The Nigeria Tax Act, 2024, represents a significant legislative leap forward in the taxation of digital assets in Nigeria. By explicitly including “digital assets” within the scope of chargeable assets and outlining their treatment under various tax heads, the Act provides much-needed clarity for participants in Nigeria’s burgeoning digital economy. The provisions on jurisdiction and the specific deductibility of losses underscore a comprehensive attempt to address the unique characteristics of digital assets. This proactive stance, aligned with growing trends across other African nations, positions Nigeria to better harness the economic potential of the digital asset space while ensuring a more equitable and efficient tax system. The successful implementation of these proposed changes will be vital for fostering innovation while broadening the national tax base.