FG to tax cryptocurrencies in Finance Bill 2022

FG to tax cryptocurrencies in Finance Bill 2022

The Finance Bill 2022 will bring all sectors of the economy into the tax net, including Capital Gains Tax from digital assets, Cable Undertakings, Lottery and Gaming Businesses.

The bill also contains an amendment under Chargeable Assets stating that “subject to any exceptions provided by this Act, all forms of property shall be assets for the purposes of this Act, whether situated in Nigeria or not, including Options, debts, digital assets and incorporeal property generally.”

According to a statement signed late Thursday by the Senior Special Assistant to the Vice President on Media and Publicity, Laolu Akande, these formed part of the deliberations at an extraordinary virtual meeting of the National Economic Council presided over by Vice President Yemi Osinbajo.

The statement is titled ‘At NEC meeting, FG, governors in consultation on proposed 2022 Finance Bill.’

It read in part, “The meeting which was presided over by Vice President Yemi Osinbajo, SAN, members of the Council were briefed on the main features of the bill by the Minister of Finance, Budget and National Planning, Zainab Ahmed.

“According to the Minister, the proposed Finance Bill 2022 is anchored on five fundamental policy drivers: Tax Equity; Climate Change; Job Creation / Economic Growth; Tax Incentives’ Reform; Revenue Generation / Tax Administration.

“She added that the bill seeks to amend relevant taxes, excises and duty statutes in line with the macroeconomic policy reforms of the Federal Government and to amend and make further provisions in specific laws in connection with the public financial management of the Federation.”

Other aspects of the Finance Bill include Chargeable Assets, Exclusion of Losses and Replacement of Business Assets.

For instance, under the Tax Equity pillar, all sectors of the economy would be brought into the tax net, including Capital Gains Tax from digital assets, Cable Undertakings, Lottery and Gaming Business.

Similarly, under the Climate Change and Green Growth pillar of the bill, there would be incentives for the natural gas sector and discouragement of gas flaring.

Under the pillar of Tax Incentives’ Reforms, there would be new deductions for Research and Development, and Investment Tax Credits; Reconstruction Investment Allowance; Rural Investment Allowance; Incomes in Convertible Currencies to be exempt, among others.

Also, the bill contains an amendment under Chargeable Assets stating that “subject to any exceptions provided by this Act, all forms of property shall be assets for the purposes of this Act, whether situated in Nigeria or not, including Options, debts, digital assets and incorporeal property generally.”

According to the bill, these provisions clarify the basis for the taxation of Cryptocurrency and other Digital Assets in line with the Government’s policy thrust of enhancing the cross-border and international taxation of growing e-commerce with emerging markets.

By doing so, Nigeria will join the league of jurisdictions currently taxing digital assets, including the United Kingdom, the United States of America, Australia, India, Kenya and South Africa.

Ahmed further noted that extensive consultations had been done on aspects of the bill, such as tax avoidance and tax evasion by introducing a general anti-avoidance route.