The president of the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), Obinna Iwunna, has commented on the implementation progress of the Finance Act, 2023, signed into law on May 28. According to Iwunna, the successful execution of the law will be challenging due to its premature introduction.
The act introduces a series of tax reforms aimed at modernizing the country’s fiscal framework. Among its provisions was the introduction of a 10% tax on gains from the disposal of digital assets, including cryptocurrencies.
In a Cointelegraph interview, Iwunna criticized the idea of implementing a 10% tax on cryptocurrencies in the current uncertain climate, likening it to putting the cart before the horse. He highlighted the ongoing issue with the Central Bank of Nigeria (CBN) instructing commercial banks not to facilitate financial transactions involving cryptocurrencies.
As commercial banks still cannot process cryptocurrency transactions, he questioned how it’s possible to tax something that is not recognized or defined, emphasizing the need for clarity and enabling infrastructure before imposing taxes. In support of this, Iwunna referenced the way the National Information Technology Development Agency (NITDA) of Nigeria defined blockchain technology through a collaborative effort and the formulation of a national policy.
Just read that very soon you all will start paying taxes on your crypto and Forex profits in Nigeria.
10% of your capital gains goes to government . What are we going to get in return?
— CryptoLord NE (@CryptoDefiLord) June 8, 2023
Iwunna stressed cryptocurrency involves security, currency and technology, overseen by the Nigerian Securities Exchange Commission (SEC), CBN and NITDA, respectively. Each entity has a specific role to play, but a comprehensive and unified understanding of cryptocurrency is crucial. Once a collective definition is established, policymakers can proceed with developing appropriate policies, regulations and eventually taxation measures.
When asked if Nigerian crypto stakeholders have approached the SEC and CBN with their concerns, Iwunna confirmed that they have reached out and are currently awaiting a response. While some discussions have taken place, no definite decisions have been made.
Acknowledging the government’s aim to broaden the tax base, Iwunna stated that it is important to ensure that taxation does not impede the growth of the cryptocurrency industry. Clarity is sought regarding the implications of taxing and its connection to the recognition of cryptocurrency and associated procedures.
According to Iwunna the lack of consultation, as observed during the E-Naira launch, may hinder adoption of the tax laws. Had there been collaboration with the digital assets ecosystem, the E-Naira could have seen rapid adoption by millions of Nigerians.