Sunday Ehigiator
PwC Nigeria has warned of the legal uncertainties, enforcement gaps and a potentially heavy compliance burden for Virtual Asset Service Providers (VASPs) in the new tax framework for virtual assets.
In its August 2026 tax alert titled, ‘Taxing the intangible: A critical analysis of the NRS guidelines on taxation of virtual assets,” PwC said the guidelines represent Nigeria’s first comprehensive administrative framework for taxing virtual assets, but cautioned that several provisions raise important legal and practical questions.
The Nigeria Revenue Service (NRS), formerly the Federal Inland Revenue Service, published Information Circular No. 2026/21, “Guidelines on the Taxation of Virtual Assets,” on July 31, 2026, as Nigeria increasingly moves from restricting digital assets towards formalising the sector.
However, PwC noted that the guideline, “Does not include any effective date even though it introduces some new obligations that are not in the Nigeria Tax Act (NTA) or Nigeria Tax Administration Act (NTAA).”
The report said a single virtual asset transaction could generate multiple tax liabilities depending on the applicable taxable event. Income tax applies to individuals at progressive rates and to companies, other than small companies, at 30 per cent on gains from disposal.
“It also applies to income and gifts received in virtual assets, including employment income, professional fees, mining rewards, staking rewards, DeFi rewards and airdrops,” it said.
The guidelines additionally introduce a 1 per cent withholding tax on gross disposal proceeds for cryptocurrencies, security and investment tokens and NFTs, with VASPs responsible for collection. Passive income from staking, mining, airdrops and DeFi yield attracts 10 per cent WHT, while professional fees attract WHT at five or 10 per cent, as applicable.
VAT is imposed at 7.5 per cent on taxable supplies connected with virtual asset transactions, including exchange fees, brokerage commissions, custody fees and advisory services.
The transfer of ownership of a virtual asset itself, however, does not constitute a taxable supply. Where virtual assets are used to pay for taxable goods or services, VAT applies to the underlying supply as if payment had been made in fiat. The guidelines also impose 1.5 per cent stamp duty, borne by the transferee, on token-to-fiat and fiat-to-token transfers.
VASPs are required to deduct the duty in token units from tokens credited and remit it to the NRS by the 15th and 30th of each month.
PwC, however, raised questions over the wider implications of the stamp-duty provision, saying the NRS position could imply that transfers of goods and intangible property are subject to the 1.5 per cent levy.
The firm noted, “Based on the law, if those transactions (including VAs) are N10m or less, stamp duty should not apply.” It added that this issue would need to be considered by the NRS and VASPs when configuring their systems.
PwC identified the dollar-referenced methodology for calculating taxable gains as one of the most technically significant provisions of the guidelines.
Under this approach, the gain is calculated using the US dollar value of the asset at acquisition and disposal, after which the resulting dollar gain is converted to naira at the CBN/NAFEM rate on the disposal date.
According to PwC, “The methodology excludes the Naira depreciation component from the taxable base, ensuring that taxpayers are not taxed on phantom gains arising purely from currency movements.”
The firm described the approach elsewhere in its analysis as, “A welcome and pragmatic policy choice,” arguing that taxing nominal naira gains on assets inherently denominated in dollars could produce punitive effective tax rates on genuine economic returns.
PwC said losses from virtual asset disposals can only be offset against virtual asset gains and not against non-VA income. Capital losses can be carried forward indefinitely, but only against future virtual asset gains.
FIFO is the default cost-base method, although taxpayers may elect to use Weighted Average Cost if applied consistently from commencement.
A major concern identified by PwC is the extensive responsibility placed on VASPs.
The firm described the VASP as a “de facto tax collector”, noting that providers must withhold WHT on disposals, deduct stamp duty in token units, enforce Tax ID requirements before account activation and file comprehensive returns. They must also charge VAT on their service fees and remit their own taxes within prescribed timelines.
The financial consequences of non-compliance are significant. According to PwC, “VASP or P2P marketplace non-compliance attracts a penalty of N10,000,000 for the first month and N1,000,000 for each subsequent month of default.”
Failure to deduct tax at source attracts a penalty of 40 per cent of the amount not deducted, while failure to remit tax deducted attracts 10 per cent per annum plus the Central Bank of Nigeria (CBN) Monetary Policy Rate, in addition to the principal amount.
PwC questioned whether the extensive obligations imposed on VASPs are equitable, particularly because similar obligations are not imposed on bureaux de change and stock exchanges. It also questioned, “whether the NRS can impose WHT outside the WHT Regulations 2024.”
The firm also warned that the interaction between WHT on gross disposal proceeds and income tax on net gains would require careful reconciliation. PwC said this would be necessary “to avoid over-taxation.”
This issue is particularly significant because the one per cent WHT is imposed on gross disposal proceeds, while income tax is subsequently calculated with reference to gains.
PwC identified Nigeria’s peer-to-peer virtual asset market as another major challenge for the NRS. While VASP-operated P2P marketplaces, whether with or without escrow, carry full collection obligations, transactions conducted outside platforms are treated differently.
The firm said, “‘true off-platform bilateral transactions’-wallet-to-wallet transfers, messaging-app trades, and in-person arrangements rely entirely on annual self-assessment by the taxpayer.” Given the perceived prevalence of informal P2P trading in Nigeria, PwC said this “represents a clear enforcement gap that the NRS will need to address.”
PwC also identified ambiguities around transactions involving companies and partnerships. The wallet-transfer safe harbour applies to individuals but not companies or partnerships, which the firm said “may create difficulties for corporate treasury operations involving multiple wallets.”
Another uncertainty concerns the requirement for all prices to be sourced from an “aggregator approved by the Service”, with PwC noting that the list of approved aggregators had yet to be published.
For businesses using virtual assets for cross-border settlement, PwC said the NRS considers the conversion of naira into virtual assets for cross-border settlement not to be a taxable disposal. However, stamp duty still applies at the conversion point and is unaffected by subsequent transmission to an offshore recipient.
PwC therefore advised businesses to carefully model the stamp-duty cost against the treasury benefits of using virtual assets for cross-border payments.
Despite the concerns, PwC said the guidelines provide clarity in several important areas.
The six-category classification covers cryptocurrencies and exchange tokens, stablecoins and payment tokens, security and investment tokens, utility and governance tokens, NFTs and sovereign digital currencies.
The eNaira and foreign CBDCs are excluded from the VA tax framework and receive the same treatment as fiat currency.
The guidelines also contain several safe harbours. PwC said merely holding a virtual asset does not trigger tax liability, while transfers between wallets belonging to the same individual are not treated as disposals.
Staking lock-ups, NFT minting, tokenisation of real-world assets without a change in beneficial ownership, collateralised loans, wrapping and unwrapping of tokens, and deposits into DeFi protocols in exchange for receipt tokens are also treated as non-taxable events.
The firm urged taxpayers engaged in virtual asset activities to urgently register for tax and obtain a Tax ID, warning that Nigerian VASPs may stop processing transactions for taxpayers who fail to meet the requirement.
PwC said VASPs should immediately review their systems to ensure they can withhold, calculate and remit taxes in token units as required. It also advised taxpayers to adopt either FIFO or Weighted Average Cost as their cost-base methodology from the outset, noting that retrospective switching is not permitted.
PwC ultimately described the framework as a workable starting point despite the outstanding legal and implementation questions. “While implementation challenges remain, the Guideline provides a workable baseline for compliance,” the firm said.
