NIGERIAN TAX ADMINISTRATION ACT(NTAA): ADEQUATEFOUNDATION FOR CRYPTO TAXATION OR A REGULATORY TYRANNY

1.1 Abstract 

The Nigerian Tax Administration Act (NTAA), enacted in June 2025, represents alandmark reform aimed at modernizing Nigeria’s tax system and providing a uniformframework for compliance, enforcement, and taxpayer rights. Against the backdrop ofNigeria’s position as one of the world’s leading adopters of cryptocurrency, theNTAA introduces provisions that extend to virtual assets, thereby laying thefoundation for crypto taxation. This paper critically examines whether the NTAAoffers an adequate legal and administrative basis for taxing cryptocurrencytransactions or whether it risks functioning as a tool of regulatory overreach. It explores the Act’s definitional clarity, enforcement mechanisms, and alignment withexisting tax statutes, while situating Nigeria’s approach within comparative global practices in the United States, European Union, and South Africa. The analysis highlights both the strengths of the NTAA—such as its potential to capture revenuefrom a vibrant crypto market and enhance transparency—and its weaknesses, including excessive compliance burdens, punitive penalties, and risks of stiflinginnovation. Ultimately, the paper underscores the trade-off between taxation andcrypto freedom, arguing that proportionate, transparent, and collaborative reforms areessential to balance fiscal needs with the decentralized ethos of cryptocurrency. 

1.2 INTRODUCTION

On 26th June, 2025, the National Assembly of the Federal Republic of Nigeriaenacted the Nigerian Tax Administration Act (NTAA) to provide uniform proceduresfor a consistent and efficient administration of tax laws, in order to facilitate taxcompliance by taxpayers and optimize tax revenue.1 The NTAA introduces aframework for advance tax rulings, enabling taxpayers to seek formal guidance on theinterpretation and application of tax laws to specific transactions. Although theserulings are not binding on the Nigerian Revenue Service, they offer valuable clarityand help reduce uncertainty in tax planning and compliance.2 Modernizing taxadministration procedures, enforcement mechanisms, and taxpayer rights andobligations. Introducing digital services, improved dispute resolution, and enhancedprotection for Nigerian taxpayers.3 Cryptocurrency in Nigeria describes the extent of cryptocurrency use, social acceptance and regulation in Nigeria. Nigeria’s crypto sector has emerged as atrailblazer in integrating decentralized finance with traditional financial systems, showcasing bold reforms and innovative applications of blockchain technology. AsAfrica’s largest economy and one of the world’s leading crypto adopters bytransaction volume, Nigeria’s journey toward financial transformation is setting aglobal example.4 The country’s adoption rate is relatively high in terms of crypto(2nd globally).5 Despite recent challenges, including a ban on crypto transactions bybanks from 2021 to 2023 and the arrest and release of Tigran Gambaryan, Nigeria’scrypto ecosystem remains vibrant. The issuance of provinsional crypto operationslicenses by the Securities and Exchange Commission (SEC) to Busha and Quidax hasaided development and growth in Nigeria’s crypto ecosystem. Blockchain-basedsolutions and cryptocurrency transfers are also becoming part of the remittanceequation. While cryptocurrencies can be volatile, some Nigerians have embracedthem as a fast and cost-efficient way to receive money from abroad. Taxation of cryptocurrency is a pressing issue both globally and locally as it sits at theintersection of revenue generation, financial integrity, and innovation policy. Globally, it’s about preventing tax evasion and harmonizing rules; locally in Nigeria, it’s about capturing revenue from one of the world’s most vibrant crypto markets whileavoiding regulatory overreach. This article explains whether NTAA empower Nigeriato fairly tax crypto, or does it risk becoming a heavy-handed tool that suffocates

1.3. NTAA AS A FOUNDATION FOR CRYPTO TAXATION

Crypto taxation refers to taxable events in which the governments of respectivecountries impose taxes on transactions involving cryptocurrency. These taxes apply toindividuals, investors, and businesses that earn income from crypto transactions.6Alegal and administrative framework through the NTAA has been provided for cryptotaxation. The NTAA provides a comprehensive legal definition of virtual assets: “Digital representations of value that can be digitally traded or transferred and usedfor payment, investment, or other financial purposes.”7 This encompasses cryptocurrencies, tokens and digital collectibles. In Nigeria, the legal framework forthe taxation of cryptocurrency transactions remains in its formative stages. While nospecific legislation has been enacted to comprehensively address the taxation of cryptocurrencies, existing laws and regulatory instruments provide a foundation uponwhich tax authorities may act. 

The Central Bank of Nigeria has played a pivotal role in shaping the regulatoryenvironment for cryptocurrencies. In 2021, the CBN issued a directive prohibitingbanks and other financial institutions from facilitating cryptocurrency transactions. This measure was primarily aimed at curbing risks associated with money laundering, fraud, and financial instability. However, the CBN’s regulations have not explicitlyaddressed the taxation of cryptocurrencies. As such, while the banking sector is restricted from direct involvement, individuals and businesses engaging incryptocurrency transactions remain subject to broader tax considerations.

Nigeria’s principal tax statutes—the Companies Income Tax Act8and the Personal Income Tax Act9—do not specifically mention cryptocurrencies. Nevertheless, theselaws provide a framework through which cryptocurrency transactions can be taxed. Depending on the nature of the activity, profits derived from cryptocurrency dealingsmay be classified either as business income or as capital gains. For instance, acompany engaged in regular cryptocurrency trading may be liable under CITA, whilean individual who realizes profit from the sale of digital assets may fall under PITA’scapital gains provisions. This flexible interpretation allows tax authorities to applyexisting laws to new financial realities. The Value Added Tax Act 10 similarly lacks explicit provisions on cryptocurrencies. Despite this omission, the Federal Inland Revenue Service (FIRS) may impose VATon certain cryptocurrency-related services. Examples include exchange platforms that facilitate the buying and selling of digital assets, or businesses that provide cryptocurrency-based services. The absence of clear statutory guidance, however, creates uncertainty for taxpayers and businesses, underscoring the need for legislativeBeyond statutory laws, regulatory agencies have issued guidance to clarify thetaxation of cryptocurrencies. In 2019, the FIRS released a public notice declaring that gains from cryptocurrency transactions should be subject to capital gains tax. Thispronouncement marked an important step toward integrating cryptocurrencies intoNigeria’s tax regime. Similarly, the Securities and Exchange Commission (SEC) hasprovided classification rules for cryptocurrency-based assets, treating certain digital tokens as securities. Such classifications have significant implications for taxation, asthey determine whether transactions fall under capital gains, business income, or othertax categories.

1.4. THE ENFORCEMENT CAPACITY OF TAX AUTHORITIESreform. 

Cryptocurrency as a taxable asset (an asset that is subject to taxation by a government agency),11possesses certain mechanisms for tracking digital transactions. Digital transactions in crypto rely on wallets, blockchain, cryptography, consensus, andbroadcasting. These mechanisms ensure security, transparency, and decentralization, making crypto both powerful and challenging to regulate. There are two authoritiesresponsible for security and transparency in the crypto ecosystem of Nigeria: Federal Inland Revenue Service (FIRS) and Securities and Exchange Commission (SEC). Nigeria’s Federal Inland Revenue Service (FIRS) has been strengthening enforcement through deeper collaboration with investigative bodies like the Economic andFinancial Crimes Commission (EFCC), aimed at curbing evasion, plugging leakages, and recovering funds. Ongoing reforms toward a National Revenue Service arepositioned to address structural enforcement gaps and streamline administration, signalling an intent to enhance audit reach, compliance management, andinter- agency data use.12 

The Securities and Exchange Commission (SEC) of Nigeria wields licensing, market surveillance, and sanction powers over securities and investment activities, includingofferings of digital assets that meet securities tests. Its enforcement toolset includesinspections, fines, suspensions, and directives, often coordinated with monetaryauthorities to protect market integrity.13 By contrast, the United States Internal Revenue Service (IRS) treats crypto as property for tax purposes, issues detailed guidance on reporting, and uses compelleddata access (e.g., John Doe summons) to obtain user records from major exchanges. Broker reporting rules for digital assets are expanding, tightening compliance andenabling matching against taxpayer filings.14 The European Union’s enforcement strength lies in cross- border administrative cooperation. DAC7 improved platform reporting; DAC8 extends this to crypto- asset service providers, enabling automaticinformation exchange and standardized taxpayer identification across member states. Parallel regulation under MiCA establishes prudential and conduct rules for cryptoservice providers, complementing tax enforcement by formalizing entities and dataflows.15 South Africa’s Revenue Service (SARS) provides clear guidance that cryptodisposals are taxable (income or capital gains, depending on facts), and coordinateswith the Financial Intelligence Centre on AML data. It conducts targeted audits andcompliance letters to taxpayers identified via local exchange records, supported byvoluntary disclosure programs.16 1.5. NTAA AS REGULATORY TYRANNY – weaknesses. The Nigerian Tax Administration Act (NTAA), while designed to strengthen thecountry’s fiscal framework, has attracted significant criticism for its potential tofunction as a tool of regulatory tyranny. Analysts and stakeholders argue that the Act imposes excessive compliance burdens on startups and individuals, risks stiflinginnovation in Nigeria’s burgeoning fintech and crypto space, and grants authoritiespowers that may be misused for surveillance or arbitrary penalties. One of the most pressing concerns is the compliance burden created by the NTAA. The Act requiresvirtual asset service providers (VASPs) and other entities to register with the Federal Inland Revenue Service (FIRS), maintain extensive records for up to seven years, andcomply with strict Know- Your- Customer (KYC) and reporting obligations. Theserequirements, while intended to improve transparency, are costly and complex for startups and individuals, potentially discouraging participation in the formal crypto Closely linked to this is the risk of stifling innovation. Nigeria has one of the highest rates of cryptocurrency adoption globally, driven by remittances, peer- to- peer trading, and fintech innovation. However, the NTAA’s punitive enforcement regime—including fines of ₦10 million for initial non- compliance and ₦1 million for eachsubsequent month—creates a hostile environment for new entrants.18 Instead of encouraging innovation, such measures may push activity back into informal channels, undermining the very transparency the Act seeks to achieve. 

Another weakness lies in the potential misuse of regulatory power. The NTAA grantsauthorities broad oversight powers, which critics warn could be used for surveillanceor selective enforcement.19 In a country where trust in regulatory institutions is oftenfragile, the risk of arbitrary penalties or politically motivated enforcement coulddiscourage legitimate businesses from operating within the regulated space. Finally, there is the broader debate over whether the NTAA prioritises revenuegeneration over innovation. Nigeria faces significant fiscal pressures, includingdeclining oil revenues and rising debt servicing obligations. In this context, the NTAAappears primarily designed to expand the tax base and mobilise revenue.20While thismay address short- term fiscal needs, it risks undermining long- term economicgrowth by discouraging investment and innovation in the digital economy.

1.6. THE TRADE-OFF BETWEEN TAXATION AND CRYPTO

The taxation of cryptocurrency presents a fundamental tension between the state’sneed for revenue and fairness on one hand, and the ethos of decentralization andfinancial freedom on the other. Governments view taxation as essential for fundingpublic services and ensuring equity, particularly as crypto gains and transactions18 Temitayo Jaiyeola, ‘From 2026, dodging taxes in Nigeria could cost crypto startups their licences and ₦10mfines’ TechCabal (18 September 2025) <https://techcabal.com/2025/09/18/nigeria-crypto-tax-law-vasp 19 Royal Ibeh, ‘Regulatory gridlock threatens Nigeria’s crypto market ahead 2026 tax enforcement’ BusinessDay(3December 2025) <https://businessday.ng/technology/article/regulatory-gridlock-threatens-nigerias-crypto increasingly form part of the global economy.21 Yet, the decentralized nature of cryptocurrency challenges traditional tax enforcement, raising concerns about overregulation and the erosion of the freedoms that make crypto attractive. From the perspective of government revenue and fairness, taxation of crypto ensuresthat individuals and businesses who profit from digital assets contribute to the publicpurse, just as they would with traditional investments.22 Without taxation, cryptocould become a haven for tax evasion, undermining fiscal stability and fairness in thetax system. Countries such as the United States and South Africa have alreadyclassified crypto as taxable property or assets, thereby integrating it into their taxOn the other hand, crypto’s decentralized ethos emphasizes autonomy, privacy, andfreedom from centralized control. Heavy-handed taxation and enforcement mechanisms risk undermining these values, discouraging adoption, and stiflinginnovation.24 In Nigeria, where crypto adoption is among the highest globally, excessive compliance requirements under the Nigerian Tax Administration Act (NTAA) could push users back into informal peer-to-peer channels, defeating thepurpose of regulation.25 To balance this trade-off, several reforms and safeguards are necessary: First is the clear definitions of crypto assets. Ambiguity in classification (currency, property, or commodity) complicates taxation. Nigeria, like many jurisdictions, must provide precise definitions to avoid uncertainty and selective enforcement.26Secondly, transparent enforcement mechanisms. Tax authorities should adopt clear, predictable processes for compliance and penalties, reducing fears of arbitrary regimes.23 enforcement. 

Another reform is the collaboration with industry stakeholders. Regulators shouldengage fintech firms, exchanges, and user communities to design workable frameworks that encourage compliance without stifling innovation.27 Proportional taxationis also a good reform for balance. Tax rates and complianceobligations should be proportionate to transaction size and business scale, ensuringthat startups and individuals are not overburdened. This prevents discouragingadoption while still mobilizing revenue.28 Ultimately, the challenge lies in striking a balance: taxation must secure revenue andfairness, but it must also respect the freedoms inherent in crypto’s decentralized ethos. A proportionate, transparent, and collaborative approach offers the best path forward.

1.7. CONCLUSION 

The Nigerian Tax Administration Act (NTAA) provides a significant legal foundationfor the taxation of cryptocurrency by formally recognizing virtual assets andextending existing tax statutes to digital transactions. It strengthens enforcement capacity through collaboration with agencies like the FIRS and SEC, aligning Nigeriawith global trends in crypto taxation. However, its heavy compliance obligations, punitive penalties, and broad oversight powers risk transforming the Act into a tool ofregulatory tyranny. While NTAA establishes the framework needed to integratecrypto into Nigeria’s tax regime, its current design leans toward excessive regulationthat could stifle innovation and push activity back into informal channels. Striking abalance between revenue generation and crypto freedom will require reforms that  emphasize proportionality, transparency, and collaboration with industry stakeholders.

Reference(S):

1 Nigerian Tax Administration Act 2025, s 1 

2 TEMPLARS Client Alert, “Understanding the New Nigerian Tax Regime: Key changes and impact”

3 MyTax Nigeria “Nigeria Tax Administration Act” [2025] <mytax.com.ng/tax-laws/nigeria-tax-administration-act>

4 Emily Ekshian, “Nigeria’s Crypto Landscape is Transforming Through Fintech Growth” [2025] PL 1

5 Chainalysis 2024 Crypto Adoption Index

6 Crypto Taxation-What is it, Examples, Problems – WallStreet Mojo <www.wallstreetmojo.com/crypto-taxation/>

7 Nigerian Tax Administration Act[2025], s 79, Fifth Schedule

8 Companies Income Tax Act [2004] LFN 

9 Personal Income Tax Act [2004] LFN 

10 Value Added Tax Act [2004], CAP. V1 LFN

12 Leadership, ‘Strengthening Compliance: How EFCC–FIRS Synergy Can Transform Nigeria’s Tax System’ ( 2024) <https://leadership.ng/strengthening-compliance-how-efcc-firs-synergy-can-transform-nigerias-tax-system/>

13 AO2LAW, ‘From FIRS to NRS: The Changing Tax Landscape and Its Implications for Businesses in Nigeria’ (2024)

14 Internal Revenue Service, ‘Frequently Asked Questions on Virtual Currency Transactions’ (2024)  https://www.bing.com/ck/a?!&&p=2aa6bc4cb60cee344540d3d7152eee8df31659e940f810f6a154267bbd4bdf91JmltdHM9MTc2NTQxMTIwMA&ptn=3&ver=2&hsh=4&fclid=0a0d733c-f7bd-6e79-29a0- 65a9f6596fbb&psq=meaning+of+taxable+assets&u=a1aHR0cHM6Ly93d3cubW9uZXlsYW5kLmNoL2VuL3RheGFibGUtYXNzZXQtZGVmaW5pdGlvbg <https://ao2law.com/from-firs-to-nrs-the-changing-tax-landscape-and-its-implications-for-businesses-in nigeria/> <https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies>

15 European Commission, ‘Directive on Administrative Cooperation (DAC8): Extending Reporting to Crypto-AssetService Providers’ (2023) <https://taxation-customs.ec.europa.eu/dac8_en>

16 South African Revenue Service, ‘Tax Treatment of Crypto Assets’ ( 2023) <https://www.sars.gov.za/businesses 

17 Royal Ibeh, ‘Regulatory gridlock threatens Nigeria’s crypto market ahead 2026 tax enforcement’ BusinessDay(3December 2025) <https://businessday.ng/technology/article/regulatory-gridlock-threatens-nigerias-crypto economy.17 and-employers/tax-and-cryptocurrency/> market-ahead-2026-tax-enforcement/>

20 Regcompass Consults, ‘Nigeria Tax Act 2025: A Guide to Digital Asset Taxation (Crypto & NFTs)’ Regcompass(26 August 2025) <https://www.regcompass.com/taxation-under-the-nigeria-tax-act-2025/2/>FREEDOM penalties-2026/> market-ahead-2026-tax-enforcement/> 

21 Organisation for Economic Co-operation and Development (OECD), ‘Taxing Virtual Currencies: An Overview ofTax Treatments and Emerging Tax Policy Issues’ ( 2020) <https://www.oecd.org/tax/tax-policy/taxing-virtual

22 Internal Revenue Service, ‘Frequently Asked Questions on Virtual Currency Transactions’ ( 2024)

23 South African Revenue Service, ‘Tax Treatment of Crypto Assets’ (2023) <https://www.sars.gov.za/businesses

24 European Commission, ‘Directive on Administrative Cooperation (DAC8): Extending Reporting to Crypto-AssetService Providers’ (2023) <https://taxation-customs.ec.europa.eu/dac8_en>

25 Royal Ibeh, ‘Regulatory gridlock threatens Nigeria’s crypto market ahead 2026 tax enforcement’ BusinessDay(3December 2025) <https://businessday.ng/technology/article/regulatory-gridlock-threatens-nigerias-crypto

26 Regcompass Consults, ‘Nigeria Tax Act 2025: A Guide to Digital Asset Taxation (Crypto & NFTs)’ Regcompass(26 August 2025) <https://www.regcompass.com/taxation-under-the-nigeria-tax-act-2025/2/> currencies-an-overview-of-tax-treatments-and-emerging-tax-policy-issues.htm> <https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies> and-employers/tax-and-cryptocurrency/> market-ahead-2026-tax-enforcement/> 

27 Temitayo Jaiyeola, ‘From 2026, dodging taxes in Nigeria could cost crypto startups their licences and ₦10m fines’ TechCabal (18 September 2025) <https://techcabal.com/2025/09/18/nigeria-crypto-tax-law-vasp 

28 OECD, ‘Taxing Virtual Currencies: An Overview of Tax Treatments and Emerging Tax Policy Issues’ ( 2020) penalties-2026/> <https://www.oecd.org/tax/tax-policy/taxing-virtual-currencies-an-overview-of-tax-treatments-and-emerging tax-policy-issues.htm>