The Digital Assets Coalition (DAC), a body representing participants and operators in Nigeria’s digital assets ecosystem, has called on the Nigeria Revenue Service (NRS) to review key provisions of the recently introduced Guidelines on the Taxation of Virtual Assets, warning that some of the proposed taxes could discourage compliance, drive users to offshore platforms and ultimately reduce government revenue.
In a comprehensive position paper titled “Tax the Profit, Not the Movement of Money,” and released in August 2026, the Coalition made it clear that it is not opposed to taxing cryptocurrency transactions. Rather, it argues that the current framework taxes the movement of digital assets instead of the profits derived from them, a distinction it believes could have far-reaching consequences for users, businesses and government alike.
“We support the taxation of virtual assets,” the Coalition stated. “Our concern is narrow and specific.” Its central message is simple: “Tax the profit, not the movement of money.”
The Coalition Supports Taxation, But Not the Current Structure
The Digital Assets Coalition acknowledges that Nigeria’s growing digital economy should contribute to national revenue, especially at a time when government is seeking to improve tax collection.
According to the paper, the Coalition supports taxing capital gains from virtual assets, mandatory registration of Virtual Asset Service Providers (VASPs), customer verification and transaction reporting in line with global anti-money laundering standards.
It also backs the government’s objective of bringing the digital assets sector into the formal economy. However, it argues that two provisions in the proposed Guidelines depart from internationally accepted tax principles by imposing taxes on transactions irrespective of whether users make any profit.
“Our objection is to one design choice inside the Guidelines,” the Coalition explained, referring to charges imposed on the gross movement of money rather than on profits earned.
Why the Coalition Says the Guidelines Miss the Mark
At the heart of the Coalition’s concerns are two proposed charges.
The first is a 1.5 per cent stamp duty imposed every time users convert naira into virtual assets or convert virtual assets back into naira. According to the Coalition, the duty applies regardless of whether the transaction generated any profit.
The second is a one per cent withholding tax deducted from the gross value of every virtual asset sale, rather than from the actual profit realised.
The Coalition argues that while the withholding tax can eventually be credited against a taxpayer’s final liability, the stamp duty is permanent and applies even where users incur losses.
“The permanent charge is the 1.5% duty,” the paper states. “It is paid whether you gain, break even, or lose. That is the heart of the problem: a tax on moving money, not on making it.”
According to the Coalition, the proposed stamp duty is also significantly higher than the transaction fees currently charged by most regulated exchanges, potentially increasing users’ costs by several hundred per cent.
Ordinary Nigerians Could Bear the Biggest Burden
Rather than focusing on large crypto investors, the position paper highlights how ordinary Nigerians could be affected by the proposed tax regime.
The Coalition uses several hypothetical examples to illustrate its concerns.
One example is Aisha, who sends ₦2 million to her brother studying abroad by converting the money into USDT. Because the transaction is purely a remittance and not an investment, she makes no profit. Yet she still pays ₦30,000 in stamp duty on a single transfer, amounting to ₦120,000 annually if she sends money four times a year.
Another case involves Tunde, a small importer who uses digital assets to pay overseas suppliers. According to the Coalition, the annual transaction charges on his supplier payments exceed the profit he earns from that line of business, leaving him with little choice but to increase prices for consumers.
The paper also cites Emeka, a nurse who invests ₦500,000 in cryptocurrency only to suffer a significant market loss. Despite losing more than ₦100,000, he still pays both transaction duties and withholding tax when selling his assets. “He paid tax in a year he lost money,” the Coalition noted.
For freelancers such as Chinelo, who receive payments from foreign clients in USDT, the Coalition argues that the proposed framework could amount to double taxation. While income tax is already paid on earnings, converting those earnings into naira attracts additional transaction charges.
The Coalition also raised concerns about students and low-income earners. Using the example of Blessing, who earns small blockchain rewards, it argues that compliance requirements, including registration, record-keeping and annual tax filing, could become more burdensome than the income itself.
“The compliance burden is heavier than the amount she earns,” the paper stated.
Lessons from Other Countries
To support its position, the Coalition points to experiences from countries that have implemented similar transaction-based taxes.
It cites India, which introduced a one per cent withholding tax on crypto transactions in 2022. According to research referenced in the paper, domestic trading volumes on regulated exchanges declined sharply as users migrated to offshore platforms, resulting in lower-than-expected tax collections.
The paper also highlights Kenya, which introduced a three per cent tax on digital asset transactions in 2023 before repealing it in 2025 and replacing it with a tax on exchange service fees.
According to the Coalition, Kenya’s Finance Committee chairman likened the former tax to “being taxed for depositing money in your bank.”
Similarly, Turkey reportedly abandoned plans to introduce a crypto transaction tax after concerns that it would push users and capital outside the country’s regulated financial system.
Drawing comparisons with jurisdictions such as South Africa, Brazil, the United Kingdom and the United Arab Emirates, the Coalition argues that most mature regulatory environments tax profits from digital assets rather than every transaction involving them.
Why the Coalition Believes Government Could Lose Revenue
Beyond the impact on users, the Coalition argues that the proposed tax design may also undermine the government’s own revenue objectives.
Nigeria currently benefits from significant digital asset activity occurring on licensed and regulated platforms that verify customers and report transactions to authorities.
According to the Coalition, imposing high taxes on conversions could encourage users to migrate to offshore exchanges or peer-to-peer platforms that fall outside Nigeria’s regulatory oversight.
“The design taxes the on-ramp and regulated venue so heavily that it dismantles the collectors and helpers it depends on,” the paper stated, describing the situation as “akin to the king killing his messenger.”
The paper further argues that enforcing taxes on millions of low-value retail transactions would be significantly more expensive than collecting taxes from licensed platforms operating within a transparent regulatory framework.
The Coalition’s Recommendations
Rather than calling for the withdrawal of the Guidelines, the Coalition proposed a series of amendments which it believes would achieve the government’s objectives while encouraging compliance.
Among its recommendations are a temporary deferment of implementation to allow broader consultation with industry stakeholders, removal of the proposed stamp duty on conversions and the one per cent withholding tax on gross sales, and a focus on taxing actual profits instead of transactions.
It also recommends that taxes be paid in naira rather than virtual assets, arguing that current Nigerian law recognises taxes as payable in legal tender.
In addition, the Coalition is seeking exemptions for students, low-income users and small retail transactions, while supporting the retention of registration and reporting obligations for Virtual Asset Service Providers.
It also called for tax rates to be determined by legislation passed by the National Assembly rather than administrative notices.
A Debate Beyond Cryptocurrency
Although the immediate focus is virtual assets, the Coalition believes the debate has broader implications for Nigeria’s digital economy. It argues that the country has an opportunity to build a tax framework that supports innovation while ensuring that participants contribute fairly to government revenue.
“This is not a fight against taxation,” the paper concludes. “It is a request for a design that works for citizens and for the Revenue Service alike.”
The Coalition’s final appeal is for the Nigeria Revenue Service to delay implementation, engage stakeholders and redesign the framework to focus on taxing profits rather than transactions.
“We ask the Nigeria Revenue Service to recalibrate commencement, consult, and revise the design to tax profit, not movement,” the paper stated, adding that the Coalition and its members remain ready to support the development of “a workable framework” for the sector.