The Digital Currency Coalition (DCC), the largest coalition of crypto asset practitioners and founders in the African digital currency space, has expressed concern over the plans by the Federal Government to tax digital assets as provided in the Finance Act 2023.
The Coalition in a statement released on Monday said the plan to tax without a proper regulation of the industry would not augur well for the country. The coalition noted that imposing taxes when banks in the country are not allowed to process any digital currency-related transaction calls for concerns.
While noting that the industry’s potential is currently being hindered by the banking service ban, DCC, said with proper regulation and strategic implementation, digital currencies can serve as catalysts for job creation, innovation, and sustainable development in Nigeria.
Embracing digital currency
In the statement jointly signed by the CEO of Tradefada, Seun Dania, CEO and Co-founder of Quidax, Buchi Okoro, CEO and Co-founder of Nestcoin, Yele Bademosi, and PMO Digital Currency Coalition, Geoffrey Nwokolo, the coalition said:
- “We firmly believe that embracing and leveraging the opportunities presented by digital currencies and blockchain can make a significant contribution to the nation’s economic advancement. While we acknowledge the potential risks and challenges associated with this emerging sector, we emphasize that with proper regulation and strategic implementation, digital currencies can serve as catalysts for job creation, innovation, and sustainable development.
- “As the leading voice in the digital currency and blockchain space, DCC stands ready to collaborate with the government, leveraging our expertise to shape a robust and future-oriented digital currency ecosystem. We are committed to demonstrating to the nation’s leaders how embracing digital currencies can lead to sustainable job creation, especially for the young population, fostering independence and freeing up national resources for other social causes.”
While acknowledging the positive steps taken by the government in formulating a national blockchain policy, the DCC applauded the collaborative approach that involved stakeholders within the blockchain space, including the Digital Currency Coalition, in creating the policy and facilitating its implementation.
It noted that the inclusive approach ensures that legislation and regulation have a practical touch.
- “However, we do express moderate concerns regarding the inclusion of provisions for the taxation of digital assets in newly enacted fintech-focused legislation. These provisions come at a time when the sector’s potential is still hindered by challenges such as the nationwide banking service ban on its operators,” it added.
The body reiterated its commitment to working hand in hand with the government, regulators, and industry stakeholders to ensure the responsible growth of the digital currency industry in Nigeria. It added that the Coalition’s goal is to create an environment that fosters shared prosperity for all while not stifling innovation and growth in the sector.
What you should know
The Finance Act 2023, which was signed into law at the twilight of the Muhammadu Buhari administration introduced 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.
This move aligns Nigeria with several other nations around the world that have recognized the need to tax digital asset transactions effectively.
Taxing digital assets is good but shouldn’t be overtaxed or multitaxed. It also gives legitimacy to crypto trading which will attract more adoption and liquidity