Finance Bill: FG to tax cryptocurrency, games, and other digital assets

The Finance Bill 2022, which is presently being developed by the ministry of finance, would include taxes for cryptocurrencies and other digital assets, according to an agreement reached by Nigeria.

This was declared following a National Economic Council (NEC) extraordinary virtual meeting on the proposed Finance Bill 2022, where it was also decided to revise the text with new state governor input as the bill moved forward to the Federal Executive Council.

The Vice President, 36 governors, and the Governor of the Central Bank make up the NEC. Some Federal Executive Council members also attend the Council meetings.

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According to the finance minister, Zainab Ahmed, “the bill seeks to amend relevant taxes, excises and duty statutes in line with the macroeconomic policy reforms of the Federal Government and to amend and make further provisions in specific laws in connection with the public financial management of the Federation.”

She added that the measure aims to ensure that all economic sectors, particularly those that have developed over time like the gaming and cryptocurrency sectors, are included in the tax nets.

For instance, all economic sectors, including those with capital gains from digital assets, cable undertakings, lottery, and gaming businesses, would be subject to taxes under the Tax Equity pillar.

The Minister claims that the proposed Finance Bill 2022 is based on five essential policy pillars:

• Tax Equity;
• Climate Change;
• Job Creation / Economic Growth;
• Tax Incentives Reform;
• Revenue Generation / Tax Administration

In line with the government’s strategic goal of improving cross-border and international taxation of expanding e-commerce with emerging economies, the bill contains measures that make clear the legal foundation for the taxation of cryptocurrency and other digital assets.

Taxing capital gains from digital assets like lottery, gaming (sports betting), and Cable Undertaking is one of the digital tax considerations that are in line with the tax equity pillar of the bill.

The government thinks that by taxing digital assets, Nigeria would join the group of nations that already do so.

The United Kingdom, the United States of America, Australia, India, Kenya, and South Africa are a few examples of these nations.

The proposed law also has a provision related to climate change, which is categorized under the bill’s Climate Change and Green Growth pillar.

The idea is to reduce gas flaring while providing incentives for the natural gas industry.
The pillar of Tax Incentives Reforms also includes incentives that offer additional deductions for R&D, investment tax credits, reconstruction investment allowances, rural investment allowances, and exemptions for incomes in convertible currencies, among other things.

The bill also includes a change to Chargeable Assets that reads, “Subject to any exceptions provided by this Act, all forms of property shall be assets for the purposes of this Act, whether situated in Nigeria or not, including Options, debts, digital assets, and incorporeal property generally.”