The Digital Assets Coalition (DAC), an industry alliance representing digital asset operators and participants in Nigeria, has warned that the newly released guidelines on the Taxation of Virtual Assets is a threat to destabilize the country’s $92 billion digital asset market.
The coalition raised the alarm during a press conference in Lagos today following the publication of Information Circular No. 2026/21 by the Nigeria Revenue Service (NRS). The new administrative framework sets tax, valuation, and compliance obligations for Virtual Asset Service Providers (VASPs), peer-to-peer (P2P) platforms, and retail users.
But in its formal position paper titled “Tax the Profit, Not the Movement of Money,” the industry body expressed deep concern over the framework’s core design, arguing that it levies charges on gross transaction movements rather than realized gains.
DAC’s arguments
The coalition highlighted three major friction points in the administrative guidelines:
- A non-refundable 1.5% levy under Item 33 of the Ninth Schedule to the Nigeria Tax Act, charged on every fiat-to-token and token-to-fiat conversion regardless of whether the user makes a gain or a loss.
- A mandatory 1% withholding tax deducted from the total value of every sale, creating compounded losses for high-frequency traders and users liquidating at a loss.
- An operational requirement to remit taxes in digital tokens, which the coalition notes conflicts with Section 39 of the Nigeria Tax Administration Act (NTAA) 2025 requiring payments in legal tender currency.
What they want
The coalition stressed that these levies compound fastest against young, high-frequency traders, freelancers, and students who rely on digital assets for international remittances and inflation hedging.
“We support the taxation of virtual assets without qualification. Our concern is with a design choice that taxes the movement of money itself. This charge falls on a remittance to a student abroad, on a freelancer converting earnings already taxed as income, and on a trader in a year they lost money. That is not a tax on profit. It is a toll on participation,” said Obinna Iwuno, Spokesperson for the Digital Assets Coalition.
Iwuno added that the transaction-level levies effectively bite below the ₦10 million threshold exempted under the Nigeria Tax Act and erode income within the zero-rated ₦800,000 personal income tax band. “The framework is anti-youth in effect, even if not in intent,” he said.
Cases in other climes
Citing international comparisons, the coalition noted that similar transaction-based levies have severely damaged domestic markets:
- India: A 1% transaction withholding tax caused domestic exchanges to lose 81% of trading volume within four months, driving over 90% of activity offshore.
- Kenya & Turkey: Kenya repealed its 3% transaction tax in 2025, while Turkey withdrew a similar levy in 2026 after recognizing market flight.
Final call
The Digital Assets Coalition is calling on the Nigeria Revenue Service (NRS) to defer implementation, engage in public consultation, transition to a net-capital-gains model, collect taxes strictly in Naira, and establish an exemption to protect small-scale retail users.