FIRS to Regulate Cryptocurrency, Introduces VAT on Transactions

The Federal Inland Revenue Service (FIRS) has announced plans to seek the support of the National Assembly to enact a law regulating the cryptocurrency industry in Nigeria.

The revelation was made by the Executive Chairman of the FIRS, Zacch Adedeji, during a stakeholder engagement with the Senate and House Committee on Finance.

According to Adedeji, the proposed law aims to regulate the cryptocurrency market and ensure that it does not pose a threat to Nigeria’s economic development. He emphasized that the plan is to have a law that regulates the industry, which is a necessary step in any other country where this innovation or system exists.

Adedeji revealed that the FIRS is proposing a bill that would overhaul the entire process of revenue administration in Nigeria, harmonizing and simplifying tax laws. The bill, which is expected to be introduced by September, will also address the need for a modernized law to regulate cryptocurrency transactions.

The move comes as cryptocurrency platforms have been facing intense scrutiny in Nigeria, following the exit of Binance, which was accused by the government of manipulating the naira-to-dollar exchange rate. The FIRS has already imposed a 7.5% Value-Added Tax on crypto transaction fees, effective July 8, 2024.

The Central Bank of Nigeria recently lifted its ban on banks operating accounts for crypto service providers, signaling a shift towards a more open but regulated approach. This development has been welcomed by many local crypto users.

The FIRS has invited lawmakers to collaborate on the proposed bill, which is seen as a crucial step towards establishing a framework for the regulation of cryptocurrency in Nigeria.