A Stupid Simple Guide to How Crypto Taxes Work in Nigeria

In June 2025, Nigeria’s president, Bola Ahmed Tinubu, signed four tax reform bills into law. These laws, which took effect from January 1, 2026, affect how individuals and businesses in the country are taxed.

With these tax laws still new and complex, most average Nigerian crypto users are unsure about how their crypto holdings will be taxed. Some hold misconceptions about how these digital assets will be taxed, which have spread online.

This article aims to provide credible information about how crypto holdings held by individual Nigerian investors will be taxed. It also discusses various automated tax software tools that will make tax filing easy and intuitive for anyone.

How Do Crypto Taxes Work?

In most countries, governments impose taxes on their citizens to fund public services and other expenses. The applicable tax varies between countries.

In most jurisdictions, tax levies are grouped into income taxes and capital gains taxes (CGT). Income taxes apply to wages, salaries, and money earned. CGT applies to profits from the sale of assets, such as crypto, gold, silver, real estate, stocks, and property. Some countries, like Nigeria, do not impose capital gains taxes as separate taxes. Instead, they are combined with the income taxes for the year.

Narrowing it to cryptocurrencies, countries such as the United States and the United Kingdom have introduced policies governing the taxation of cryptocurrencies within their jurisdictions.

In the U.S., for instance, income tax rules apply to crypto activities, such as mining, staking, and airdrops. It also applies when one receives their salary in crypto or earns any other crypto-related income/incentive, such as airdrops. Capital gains taxes, on the other hand, apply to crypto sales, swaps, and the use of crypto to purchase goods and services.

Taxes are paid annually, and each country defines the start and end of its own tax year. For example, in the UK, the tax year runs from April 6th to April 5th the following year. On the other hand, countries like the U.S. and Nigeria use a calendar year, from January 1st to December 31st.

Notably, not every transaction a taxpayer makes is subject to taxation. For example, most governments define gifts, inheritance, welfare, child support, and donations as non-taxable events. Every taxable transaction is called a taxable event.

How Crypto Taxes Work in Nigeria

The Nigeria Revenue Service (NRS) is the federal tax authority responsible for overseeing the country’s tax activities. The agency was formerly called the Federal Inland Revenue Service (FIRS).

In the recently enforced Nigeria Tax Act, the NRS classified crypto under “digital or virtual assets,” and they are subject to taxation. Notably, the journey to establish a regulatory framework for crypto taxation in the country began about two years ago. The latest move marks a significant shift from a pessimistic stance that the government once held.

With the new law in place, cryptocurrencies such as BTC, ETH, SOL, and XRP are now subject to taxation. The umbrella term “virtual assets” also covers non-fungible tokens (NFTs), memecoins, utility tokens, and other blockchain-based assets.

Activities such as crypto trading, disposals (sales, transfers), swaps, and NFT royalties are a basis for taxation.

The law stipulates that Nigerian crypto users must pay taxes on their crypto transactions even if the exchange or wallet they use is hosted in another country. Taxation also applies when the currency involved is not the naira, the country’s sovereign currency. The new law applies to individuals, businesses, and large companies.

The Nigeria Tax Act also outlines the circumstances under which tax deductions apply. For context, tax deductions are expenses that are deductible from a taxpayer’s total taxable income for the year. This includes income from their crypto account(s), traditional bank accounts, and other financial accounts they have.

To illustrate, if an individual sells their crypto holdings or makes any other transaction at a loss, they will not need to pay tax on that transaction. However, if the same individual also makes a profit on other investments they have, such as their stocks, during the tax year, they must pay a tax after realizing (withdrawing) the gain.

Notably, the NRS noted on its official website that virtual asset service providers (VASPs), such as Binance, Trust Wallet, and KuCoin, “must submit monthly returns detailing transactions, customer information, and asset values to the relevant tax authority, in addition to standard annual returns.”

However, the latest tax guideline did not explicitly state that VASPs must collect their users’ Tax Identification Number (TIN) and National Identity Number (NIN) for crypto tax purposes. Instead, it urges users to report their taxes yearly.

Failure to submit the taxes attracts penalties. Although the latest tax rules did not specify an amount that defaulters would pay, the NRS stated on its website that an administrative penalty of ₦50,000 for the first month and ₦25,000 addition in subsequent months of default.

Under the Nigeria Tax Act, individuals who fail to fulfill their tax obligations will pay interest on unpaid taxes and any other penalties the tax authority may impose. The NRS will take into consideration factors such as the amount of unpaid tax and the length of the default when dispensing its judgment.

How Will Nigeria Tax Crypto Assets?

While it is true that the Nigerian government is imposing taxes on crypto activities, it is important to note how the NRS implements these taxes. This would help users to ascertain how their crypto is taxed and file their taxes accordingly.

To better understand it, we will examine two examples that illustrate how the NRS applies tax to crypto transactions.

Example 1:

If Alice buys BTC for ₦2 million and later sells it for ₦3.2 million, she has made a ₦1.2 million gain. Hence, when reporting her taxes for the year, she must mention that she has a chargeable gain of ₦1.2 million. This means she would pay tax on the profit.

Example 2:

If Bob swaps ETH worth ₦5 million for SOL and does not withdraw it into naira, he must mention the gains from the crypto swap in his tax report.

How Do Tax Deductions Work?

Knowing tax rates helps taxpayers determine when to pay taxes and when not to. Here is a breakdown of the applicable tax rates on taxable income at the end of each tax year:

• The first ₦800,000 is 0%.
• The next ₦2.2 million is 15%.
• The next ₦9 million is 18%.
• The next ₦13 million is 21%.
• The next ₦25 million is 23%.
• Anything above ₦50 million is 25%.

Let’s illustrate how it works with Example 1. Recall that Alice netted a profit of ₦1.2 million from her crypto trade. Now, let us assume this is the only taxable income she received throughout the tax year. This means we are not counting taxable income from salaries, gifts, or other sources.

Since the first ₦800,000 is tax-free, Alice will pay no tax for the first ₦800K. That leaves her with ₦400,000 from the ₦1.2 million profit. Remember that the next ₦2.2 million is subject to a 15% charge. As a result, a 15% charge will apply to the remaining ₦400K, which is ₦60,000.

Therefore, Alice will pay a tax of ₦60,000 for making a total profit of ₦1.2 million for the year.

In reality, a significant number of Nigerians rely on monthly salaries. This means they would have to sum up their wages for all 12 months, along with other income and chargeable gains from digital assets, such as crypto. After summing it all up, they would deduct the tax-free ₦800,000 and apply the tax rate to the remaining amount, if any.

How to File Crypto Taxes in Nigeria

The NRS requires individual taxpayers to file tax returns at the end of each tax year.

Granted, the Nigerian Tax Act did not explicitly specify a filing method that taxpayers must use. Still, it urges users to pay their taxes to the relevant tax authority. For individuals, the government expects them to fulfill their tax obligations through the State Internal Revenue Service (SIRS), the country’s state-level tax authority responsible for collecting taxes.

Hence, individual taxpayers can visit a SIRS-operated tax office to submit their taxes. Alternatively, users can visit the NRS’s official website and file their tax reports via the self-service portal. Individuals can also hire tax consultants to fulfill their tax obligations.

Tips to Follow When Preparing Crypto Tax Reports

Here are some vital tips to keep in mind when carrying out your regular crypto activities, so as to avoid penalization from tax authorities:

• Keep accurate records: Always note how much you paid for your crypto holdings and the price at which you sold them.
• Gather all data: Compile data from all crypto exchanges, wallets, and decentralized platforms.
• Include fees to potentially reduce taxes.
• Use a naira-denominated tax calculator to determine the exact tax you would be paying.
• Differentiate taxable income from non-taxable income to reduce the taxes you pay.
• Stay up-to-date on tax regulations
• Seek professional help whenever necessary.

Should Nigerians Use Crypto Tax Software Tools?

Crypto tax software is an automated tool that crypto users employ to prepare and submit their crypto tax reports. These software tools operate like tax agents, streamlining the tax filing process for users.

Most of these crypto tax software tools are available for users in many countries. To achieve this, the platform already has a database of most tax guidelines used in the countries it supports. This way, users simply select the country they reside in and upload the crypto transactions they performed throughout the tax year. Then, the platform ascertains the applicable tax and prepares a tax report.

Note that uploading crypto transactions to crypto tax software requires connecting the crypto exchange APIs directly to the platform. This enables automatic data syncing. Alternatively, users can manually upload CSV files from their crypto wallets and exchanges to the software platform.

Since Nigeria’s crypto tax laws are relatively new, most crypto tax software providers used in other countries have not yet incorporated them into their databases. Still, Nigerian taxpayers can use these platforms to track their portfolios and see their crypto profits and losses. This way, the user can easily apply the local laws to determine the deductible tax and taxable income and include them in their tax reports.

Most crypto tax software tools have free versions that Nigerians can use. If anyone wants to access advanced features, they must purchase a pricing package. Here is a list of some crypto tax software tools that Nigerians can choose from:

• Koinly
• Taxbit
• CoinLedger
• Summ (formerly CryptoTaxCalculator)
• TokenTax
• CoinTracker

In developed countries, systems such as FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and HIFO (Highest-In, First-Out) are used to determine the cost basis for taxing cryptocurrencies. The Nigerian Tax Act and the NRS website did not specify which method taxpayers should use, making it difficult to use crypto tax software to prepare crypto tax reports. As a result, it is probable that the Nigerian government will incorporate more guidance as to how these inventory valuation methods will be used when preparing tax reports.

FAQs

Will the Nigerian government remove tax from my crypto holdings?

No, the Nigerian government will not remove taxes from your crypto holdings. After reporting their crypto taxes, the government requires users to pay the naira equivalent of their tax levies to the appropriate authority.

How much tax will I pay on my crypto income?

The amount depends on your total earnings at the end of the tax year. If you earn ₦800,000 or less for the entire year, you will pay 0% tax. However, if you earn more than this amount, a specific tax rate applies, starting at 15%.

Will Nigerians pay tax when using the crypto P2P service?

The Nigerian Tax Act did not explicitly impose a tax on activities such as peer-to-peer (P2P) trading. Still, transactions such as selling crypto for naira via a P2P channel should be treated as taxable events. This is particualrly so when you sell the crypto at a profit. Hence, you should mention it in your tax report to avoid possible penalties in the future.

Final Thoughts

Are you a Nigerian seeking clarity amid the noise and misconceptions saturating the internet about the newly enacted tax laws? This article discussed everything there is to know about the new tax regulations. It also highlighted various questions that many Nigerians have asked pertaining the tax law and how it applies to crypto. Reading and following through on these will help Nigerians to fulfill their tax duties adequately.

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