The Digital Assets Coalition (DAC) has called on the Nigerian Revenue Service (NRS) to suspend the implementation of its newly introduced taxation framework for virtual assets, warning that key provisions of the guideline could undermine one of Nigeria’s fastest-growing technology sectors and drive businesses and users out of the country.
The Digital Assets Coalition (DAC) is the industry alliance representing digital-asset participants and operators in Nigeria.
Speaking at a press conference in Lagos on Thursday, the Coalition’s Spokesperson, Mr. Obinna Iwuno, said the industry is not opposed to taxation but insists that the current framework must be redesigned to focus on taxing profits rather than transactions.
“Our position is very clear,” Iwuno said. “We support taxation of digital assets. We are not against taxation or against the industry’s civic responsibility to contribute to national development. But we have to get it right. Tax the profits, not the movement of money.”
He noted that Nigeria occupies a strategic position in the global digital assets ecosystem, ranking first in Africa and among the world’s leading countries in cryptocurrency adoption, making it imperative for government policies to encourage rather than discourage growth.
‘Current Tax Design Punishes Losses, Not Profits’
The Coalition argued that the proposed one per cent withholding tax on gross transactions is fundamentally flawed because it applies irrespective of whether traders make profits or losses.
According to Iwuno, withholding tax should only apply to actual gains. “The way the withholding tax is structured today, whether you make a profit or a loss, you are still paying tax. That is not proper. Withholding tax is supposed to be on gains, not losses.”
He also criticised the proposed 1.5 per cent stamp duty, describing it as significantly higher than transaction fees currently charged by regulated exchanges.
“Fees on regulated exchanges today range between 0.01 and 0.3 per cent, but the proposed stamp duty is 1.5 per cent. That burden will ultimately be borne by customers, who may simply move elsewhere.”
Iwuno explained that a user could lose about 3% of each transaction to combined charges before accounting for additional taxes, creating an excessive cost burden for ordinary users.
‘Taxes Should Be Paid in Naira, Not Digital Tokens’
One of the Coalition’s strongest objections concerns the provision requiring taxes to be remitted in virtual assets rather than in Nigeria’s legal tender.
Iwuno argued that cryptocurrencies are not recognised as legal tender in Nigeria and therefore should not be used for tax remittances.
“Virtual assets are not currency; they are not legal tender in Nigeria. There is nowhere in the world where tax authorities collect taxes in cryptocurrency. Taxes should be paid in the recognised legal tender of the country.”
He further warned that requiring operators to collect and remit taxes in digital tokens effectively transforms them into custodians of customers’ assets, despite many of them being licensed only as exchange intermediaries.
“These operators are simply business platforms facilitating transactions. Asking them to hold assets on behalf of government effectively makes them custodians, and that is outside their licensing framework.”
Industry Supports Regulation, But Wants Better Policy Design
Iwuno stressed that the Coalition welcomes regulation of the virtual assets industry, including registration requirements, reporting obligations and compliance with international anti-money laundering standards.
“We support registration. We support reporting. We support transparency. Nigeria is in good company on those issues, and we are ready to help make them work.”
However, he insisted that the industry’s concern lies with the design of the tax framework rather than the principle of taxation itself. “Our objection is on the design.”
Young Nigerians Could Bear the Biggest Impact
The DAC warned that the proposed framework would disproportionately affect millions of young Nigerians who participate in low-value digital asset activities, including freelance payments, remittances, student competitions and blockchain reward programmes.
According to the Coalition, Nigeria has over 20 million retail digital asset users, many of whom engage in small-scale transactions rather than institutional trading. “These are the people who made Nigeria one of the world’s leading crypto markets,” Iwuno said.
“A student who earns ten or twenty dollars from online contests should not be dragged into an expensive tax compliance system that costs more than the income itself.”
He warned that the policy could reduce government revenue instead of increasing it by discouraging participation and driving users toward informal channels.
Lessons from India, Kenya and Turkey
To support its position, the Coalition cited international examples where similar tax policies reportedly produced unintended consequences.
Iwuno said India’s high transaction taxes resulted in a significant migration of trading activity outside the country. “They lost a substantial portion of their market, and years later they are still recovering.”
He also referenced Kenya’s decision to overhaul its earlier approach after imposing a three per cent tax, as well as Turkey’s withdrawal of a proposed cryptocurrency transaction tax in 2026 over fears it would damage the sector.
“A wise man learns from the mistakes of others. We should not repeat policies that other countries have already discovered do not work.”
Government Yet to Fully Support the Industry
While acknowledging recent regulatory progress, the Coalition argued that government support for the digital assets ecosystem has remained limited.
Iwuno claimed that many operators continue to face restrictions, including blocked access to some cryptocurrency platforms.
“What we have witnessed over the years is zero support. We have seen blacklisting, restrictions and shadow banning.”
He added that industry stakeholders had consistently advocated regulation long before government intervention.
“We were the ones asking government to regulate the sector, develop policies, establish reporting systems and create legislation. Unfortunately, when it came to taxation, there was no meaningful consultation.”
Seven Key Recommendations
The Coalition urged the Nigerian Revenue Service to postpone implementation of the guideline and engage stakeholders in broad consultations before enforcement.
Among its recommendations are:
- Suspend implementation and commence public consultations with industry stakeholders.
- Remove the one per cent withholding tax on gross transactions.
- Eliminate the proposed 1.5 per cent stamp duty on virtual asset conversions.
- Tax only realised profits rather than transaction volumes.
- Collect taxes exclusively in naira instead of digital tokens.
- Protect small retail users and students through clear exemption thresholds.
- Ensure tax rates are established through legislation passed by the National Assembly rather than administrative directives.
According to Iwuno, taxation must be designed to support innovation while ensuring government earns sustainable revenue. “The law should tax economic activity that generates profit—not the movement of money.”
Coalition Pledges Partnership with Government
Despite its criticisms, the DAC reiterated its commitment to working with regulators to develop a balanced taxation framework that promotes innovation while ensuring compliance.
“This is not a fight against taxation,” Iwuno concluded.
“It is a request for a design that works for citizens and for the revenue service alike. We stand ready to work with government to build a taxation framework that encourages growth, protects users and generates sustainable revenue for Nigeria.”