If you missed Saturday’s Notadeepdive, catch up here. If this email was forwarded to you, fix up so you never miss another edition:
TOGETHER WITH CREDIT DIRECT
The app that has it all.
Enjoy unlimited free transfers and grow your funds at 10% p.a. on the Credit Direct App.
Zaccheus the tax collector wants 30% of your Crypto Profits
“Pay me in Bitcoin or get fined” - Tywin Lannister probably
A few headlines:
🦄We have a new unicorn - Mobility Fintech Startup has completed its latest $250 million funding round, valuing it at $2.1 billion. We wrote about Moove last year here and here
🕊️RIP to the Speculator - Victor Niederhoffer, pioneer of Quant statistical arbitrage, and Father of Aubrey Niederhoffer, the founder of Swoop, passed away this week at 82. Read about Victor and Swoop here
Hello there,
The Nigeria Revenue Service published its virtual asset tax guidelines on 31 July 2026, defining 6 categories and 16 taxable events.
The headline rates are 1.5% stamp duty on on-ramps and off-ramps. 1% withholding tax, 7.5% VAT, 10% on staking.
What does this all mean for my favourite fictional character Mama Nkechi and her crypto holdings?
Mama Nkechi imports phone accessories and has a supplier in Shenzhen. Every 6 weeks or so, an invoice arrives on WhatsApp/Wechat for her to pay. For the last 3 years, the invoice has hovered around $10K to $15K per order.
Because bank wires from Nigeria to China would typically take 3-5 days to settle, costing her an unexplainable percentage every time, she decided to start using crypto to settle this trade.
She sends Naira to a P2P desk, receives USDT, and forwards it to her supplier’s wallet address. She has been doing this since 2023, and end-to-end, it takes her about 40 minutes
In the next 6 weeks, Mama Nkechi will have to make payment for another invoice.
This is how the new tax policy changes everything for her:
Stamp duty
The Nigeria Tax Act charges duty on TOKEN to FIAT and FIAT to TOKEN transfers. The circular sets the rate at 1.5%. The duty is withheld in token units. It is borne by the transferee. And the fiat consideration is not reduced by it.
This means the next time Mama Nkechi wants to make a payment of $10K, she needs to trade for the Naira equivalent of $10,150 to account for the 1.5% stamp duty, before making payment to her supplier.
Should Mama Nkechi also receive payments from her customers in crypto, she needs to start factoring in the 1.5% in her price because whenever she off-ramps to Naira via her P2P supplier or exchange provider of choice, these duties must be collected.
Either traders and exchanges start marking up every transaction by 1.5% or every crossing between Naira and tokens inside Nigeria shaves another 1.5% off the token side infinitely.
Multiply Mama Nkechi by every small importer in Nigeria running the same route, and you have a levy on the country’s informal foreign exchange settlement layer.
She buys a little USDT every month to hold dollars
She moves ₦100,000 into USDT every month, 12 times a year.
Stamp Duty: 1.5% on each conversion, withheld in tokens. She pays ₦100,000 and receives ₦98,500 worth of USDT. That is ₦1,500 a month, ₦18,000 a year.
Withholding Tax: None. Stablecoins are Category 2, and the circular says no withholding applies on their disposal.
Her annual bill: ₦18,000 on ₦1.2 million saved. All of it duty, none of it tax on profit.
This is the largest group of Nigerian crypto users. People who are traders, protecting savings from the Naira devaluation, now have to pay 1.5% for the privilege each time.
She bought ₦1 million of Bitcoin, and it doubled
She buys ₦1 million of BTC. Stamp duty takes 0.015 BTC, so she holds 0.985 BTC.
Price doubles. She sells for ₦1.97 million.
Stamp duty at entry: ₦15,000.
Withholding at exit: 1% of gross proceeds, so about ₦19,700, taken in the token she sold.
Income tax: Her gain is ₦970,000. The first ₦800,000 of annual gains is exempt. The remaining ₦170,000 falls in the 15% band, so ₦25,500.
Total: about ₦60,200 on a ₦970,000 gain. Roughly 6.2%.
She bought ₦10 million of Bitcoin, and it doubled
Same trade, at a bigger scale.
Stamp duty at entry: ₦150,000.
Withholding at exit: 1% of ₦19.7 million, about ₦197,000.
Income tax: Gain of ₦9.7 million. Deduct the ₦800,000 exemption to leave ₦8.9 million. The next ₦2.2 million runs at 15%, giving ₦330,000. The remaining ₦6.7 million runs at 18%, giving ₦1,206,000. Total ₦1,536,000.
Her ₦197,000 withholding is credited against that, leaving ₦1,339,000 to pay at filing.
Total: About ₦1,686,000 on a ₦9.7 million gain. Roughly 17.4%.
Reason: The tax bands keep climbing: 21%, then 23%, then 25% above ₦50 million of gains. Individuals top out at 25%. Companies pay a flat 30%.
She is paid in USDT by a foreign client
Her invoice is $2,000 a month.
Income tax: Fees received in virtual assets are valued at their dollar fair market value on the date of receipt, converted to Naira at the CBN/NAFEM rate. Her client is offshore and will not withhold, so she has to self-assess on her annual return(LOL)
VAT: Where the payer is non-resident, the recipient accounts for VAT on the professional fees in Naira. Most Nigerian freelancers taking foreign work in stablecoins have never done this. Read that row of the table carefully.
Cashing out: You are selling USDT for Naira, which makes you the transferee of the fiat, not of the token. The stamp duty falls on whoever buys your USDT. No withholding on stablecoin disposals.
Her bill: Income tax at her tax band on roughly ₦33 million a year, plus VAT on her fees.
Her brother sends you money from London
He sends USDT. She sells it for Naira.
Withholding tax: None. Stablecoin. (If she receives Bitcoin though, withholding tax applies)
Stamp duty: Falls on the transferee of the token, meaning whoever buys the USDT from her, not her.
Her Bill: Nothing, statutorily
In practice, the exchange or the P2P counterparty will price their 1.5% into the rate she is quoted, so she will bear some of it.
She stakes crypto for yield
Let’s say she holds ₦5 million of ETH and stakes it at roughly 3%.
Rewards: ₦150,000 a year, taxable as income at the moment she receives it, valued at dollar fair market value on the date of receipt.
Withholding: 10% where distributed by a licensed provider, so ₦15,000, taken in the token she received.
Income tax: The ₦150,000 goes into her income for the year at your applicable band.
What of the Exchange Providers?
For Exchange providers, you now have responsibility according to the policy, such as:
You are now a collection agent: You withhold in token units, on two different legs, at two different rates. Stamp duty comes off the token credited to the buyer. Withholding comes off the token being sold. On a swap, it comes off whatever the user gave up.
You hold public money in a wallet: Withheld tokens go to NRS in the originating token, with no Naira conversion. Stamp duty must reach them by the 15th and the 30th of the month of transaction. Between withholding and remittance, you are holding a revenue authority’s tokens, which is a custody question before it is an engineering one.
You have to track cost base in dollars, per user, per lot: Token, quantity net of duty, dollar price at the timestamp, exchange rate at the timestamp, acquisition date. FIFO by default. Weighted average only if the user elects it at the start and never switches. This is the longest build in the whole circular and the least likely to exist in your schema today.
Every user must be onboarded with a Tax ID: VASPs and P2P escrow operators must make a valid Tax ID a precondition for account activation, under section 8 of the Tax Administration Act. No Tax ID, no account. Tax registration now has to be wired into exchange onboarding.
Your users will trade less: A round trip through your platform now carries roughly 2.5% in frictional tax before anyone counts a gain.
Fines: ₦10 million for the first month of non-compliance, ₦1 million every month after. 40% of anything you fail to deduct. If you deducted and did not remit, the amount plus 10% per annum plus policy rate interest.
This time it’s different
This is the second attempt. The Finance Act 2023 put 10% on gains from digital assets, and enforcement went nowhere.
The difference this time is that nobody is asking you to volunteer. The exchange withholds before you see the money, and the exchange cannot open your account without a Tax ID.
Credit where it’s due, the circular is an end-to-end researched project that tries to block and account for every potential loophole, enabling the Nigerian Revenue Service to achieve its goals.
They also refuse to tax devaluation by using the dollar-referenced gain clause, which says
When you dispose of a crypto asset, your gain is computed in dollars first. Dollar cost base at acquisition, dollar proceeds at disposal, dollar gain. Only that dollar figure gets converted to Naira at the CBN/NAFEM rate on the day you sold.
Let’s say Mama Nkechi buys at ₦1 million when the rate is ₦1,000 to the Dollar, and sells at ₦1.97 million when it is ₦1,500.
Naira arithmetic says she gained ₦970,000. NRS assesses ₦470,000. The other ₦500,000 is the currency falling, and they let it go.
Compared to how banks faced the windfall tax on FX gain income, the tax authority here has admitted that most Naira-denominated gains are artificially manufactured, and has declined to tax those gains (for now).
What Next for Zaccheus?
The NRS still needs to share communication on its plans for a token treasury, and a list of tokens they will accept.
Meanwhile, the SEC also doubled the VASP capital requirement to ₦2 billion in January, and only a handful of firms hold Approval-in-Principle. The correct collection and implementation of these policies will apply to only a handful of companies, which leads me to ask what this means for neobanks who have stablecoin capabilities, and crypto infrastructure providers?
The Nigeria Revenue Service is about to become a holder of digital assets. It will need custody. It will need a disposal policy. It will be exposed to the price of whatever tokens Nigerians happen to be trading, which means it now has a balance sheet position in Bitcoin volatility whether it wants it or not.
No other tax authority has done this. Most jurisdictions require conversion to fiat before remittance precisely to avoid inheriting the price risk. They think conversion friction is a bigger problem.
The only argument I can find for this is that requiring a VASP to convert every withheld token to Naira before remitting would push enormous volume through the FX market for no revenue purpose.
If that is the case, there’s only one way to end this.
“Zaccheus, what is your wallet address?”
** The Opinions shared here are the independent analysis of the author and do not represent the views of any organisation they may be affiliated with. Nothing in this opinion piece should be regarded as Tax, Legal, Financial, or Regulatory advice.
Please do your own research and engage licensed practitioners wherever necessary.
Fascinating. Just fascinating.