…Says policy could stifle innovation, hurt young Nigerians, reduce government revenue
By Kingsley Samuel
The Digital Assets Coalition has warned that Nigeria risks losing its position as Sub-Saharan Africa’s largest virtual assets market if the Federal Government proceeds with the implementation of new tax guidelines, saying the policy could push transactions and investments offshore.
The coalition, an alliance representing digital asset operators and participants in Nigeria, raised the alarm on Thursday while unveiling its position paper titled “Tax the Profit, Not the Movement of Money” at a press conference in Lagos.
According to the coalition, Nigeria’s virtual assets market, estimated at $92 billion and driven largely by young Nigerians, could suffer a major setback under the new Guidelines on the Taxation of Virtual Assets, which came into effect on August 3, 2026.
While reaffirming its support for the taxation of digital assets, the coalition argued that the current framework taxes the movement of funds rather than actual profits, making Nigeria less competitive than other digital economies.
Spokesperson of the coalition, Obinna Iwuno, said the industry was not seeking tax exemptions but a fair and workable framework.
“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.
“This charge falls on a remittance to a student abroad, on a freelancer converting earnings already taxed as income, and on a trader in a year they lost money. That is not a tax on profit. It is a toll on participation.”
According to him, the guidelines impose a 1.5 percent stamp duty on every conversion between the naira and digital assets, regardless of whether a transaction yields profit.
He also criticised the 1 percent withholding tax deducted from the total value of every digital asset sale, even where the seller records a loss, as well as the requirement for taxes to be remitted in digital tokens rather than in naira.
The coalition maintained that while it supports registration of virtual asset platforms, customer verification and transaction reporting in line with global standards, taxes should apply only to realised gains.
Iwuno warned that the policy would disproportionately affect young Nigerians who use digital assets for freelance payments, family remittances, international commerce and savings.
“The framework is anti-youth in effect, even if not in intent,” he said.
“You cannot tax your way into the future by taxing the people building it.”
Citing international examples, the coalition said India’s 1 percent transaction withholding tax resulted in an 81 per cent decline in regulated exchange volumes within four months, with more than 90 per cent of trading reportedly moving offshore within a year.
It added that Kenya repealed its three per cent transaction tax in 2025, while Turkey abandoned a similar proposal in 2026, after concerns that such levies discouraged innovation and reduced market activity.
The coalition therefore urged the Nigeria Revenue Service to suspend implementation of the guidelines and commence wider consultations with industry stakeholders.
It also called for taxes to be imposed only on actual profits, collected in naira, with exemptions for low-value transactions, while retaining registration and reporting obligations for operators.
“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.
“If the framework is properly designed, government can improve compliance, protect innovation, retain investment and grow revenue. The Coalition stands ready to work with the authorities to make that happen.”
