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From January 1st, 2026, everyone who deals with digital assets (crypto) will be taxed
Why pay tax?
Why can’t I protest to claim that the government has not been using our hard earned tax monies to improve our lives?
Take this mutual for example
While they had a compelling argument, tax is compulsory for everyone to pay. Thanks to the 1999 constitution
Eligibility for taxation is based on two principles: residency and source
For residency, you must be living in Nigeria to pay tax to the Nigerian government
Source means that irrespective of where you are, if your income comes from Nigeria, you have to pay tax on that income to Nigeria
If you do not fall under any of the categories, please skip this article
Classifications of Tax applicable to Crypto
Taxes may be direct or indirect. They aim to resolve a question: when will you be responsible to pay tax?
For us, the main indirect tax to worry about is VAT. Except you are the person to collect it, it's not really your problem, which is most times, the case
This is why I'm focusing only on direct taxes because they affect you directly, you reading this
âž Personal Income Tax (PIT): This is a direct tax imposed on the income you earn in a year. In Nigeria, our PIT is progressive
This means that the higher your income, the higher the tax you pay
While I wouldn’t bore you with the legal definition of “income” under our laws, I’ll summarize it as:
Money you earn by doing anything crypto-related
Note: cryptos you receive as gifts will not count as money "earned". So, they can't be taxed, generally
What activities in web3 will then amount to being charged personal income tax?
âž Airdrops: If in a financial year, you earn $2000 from airdrops. This is roughly 2.9 Million Naira and will be subject to tax
Here’s the rate for personal income tax in 2026:
Since the income above is 2.9M, the first 800k will be taxed at 0%, the balance of 2.1M will then be taxed at 15%. That will amount to 315k
The balance will be 2.4M
Note: your take home can be more if you are eligible for tax reliefs. These are legal deductions you make on your total income
Once you do so, the balance will then be taxed according to the table above. A good example is the Rent Relief Allowance
Other activities subject to personal income tax are those you would earn money from: mining, staking, web3 jobs, DeFi, etc.
âž Companies Income Tax: A company, by law, is a separate person and has the attributes of a full human being
Since a human can have yearly income, so also a company. It is called Annual Gross Turnover(AGT)
The Nigerian Tax Act divides companies into the following:
Small companies: their AGT does not exceed 50 million naira. Hence, they are not subject to tax
Medium and large companies: their AGT exceeds
50 million, so they will be taxed at 30%
âž Capital Gains Tax: Imagine buying BTC, ETH and CAMP at a relatively low/comfortable price at certain times of the year
Immediately you sell it at a profit/higher price and not at a loss, the profit itself is subject to capital gains tax. You need to add the profit to your other income and apply the PIT rate to it
TLDR: In calculating your taxable income for the entire year in crypto, all gains and profits you've made will be summed up. If you've made losses, you are allowed to deduct them
Any deductions in form of tax reliefs will be made and the balance will be subject to the rates above
Collection Of Tax
At the end of each financial year, you are required to do self assessment with the tax collecting body.
Self assessment involves reporting all gains you’ve had in a year, applying the necessary deductions before calculating your tax
Final Thoughts
Good Citizens: Since tax is compulsory, non-payment is tax evasion and will attract severe punishment under Nigerian Laws
Coconut Heads: You can structure your affairs to pay the least possible tax and practice tax avoidance
Which are you?
Why pay tax?
Why can’t I protest to claim that the government has not been using our hard earned tax monies to improve our lives?
Take this mutual for example
While they had a compelling argument, tax is compulsory for everyone to pay. Thanks to the 1999 constitution
Eligibility for taxation is based on two principles: residency and source
For residency, you must be living in Nigeria to pay tax to the Nigerian government
Source means that irrespective of where you are, if your income comes from Nigeria, you have to pay tax on that income to Nigeria
If you do not fall under any of the categories, please skip this article
Classifications of Tax applicable to Crypto
Taxes may be direct or indirect. They aim to resolve a question: when will you be responsible to pay tax?
For us, the main indirect tax to worry about is VAT. Except you are the person to collect it, it's not really your problem, which is most times, the case
This is why I'm focusing only on direct taxes because they affect you directly, you reading this
âž Personal Income Tax (PIT): This is a direct tax imposed on the income you earn in a year. In Nigeria, our PIT is progressive
This means that the higher your income, the higher the tax you pay
While I wouldn’t bore you with the legal definition of “income” under our laws, I’ll summarize it as:
Money you earn by doing anything crypto-related
Note: cryptos you receive as gifts will not count as money "earned". So, they can't be taxed, generally
What activities in web3 will then amount to being charged personal income tax?
âž Airdrops: If in a financial year, you earn $2000 from airdrops. This is roughly 2.9 Million Naira and will be subject to tax
Here’s the rate for personal income tax in 2026:
Since the income above is 2.9M, the first 800k will be taxed at 0%, the balance of 2.1M will then be taxed at 15%. That will amount to 315k
The balance will be 2.4M
Note: your take home can be more if you are eligible for tax reliefs. These are legal deductions you make on your total income
Once you do so, the balance will then be taxed according to the table above. A good example is the Rent Relief Allowance
Other activities subject to personal income tax are those you would earn money from: mining, staking, web3 jobs, DeFi, etc.
âž Companies Income Tax: A company, by law, is a separate person and has the attributes of a full human being
Since a human can have yearly income, so also a company. It is called Annual Gross Turnover(AGT)
The Nigerian Tax Act divides companies into the following:
Small companies: their AGT does not exceed 50 million naira. Hence, they are not subject to tax
Medium and large companies: their AGT exceeds
50 million, so they will be taxed at 30%
âž Capital Gains Tax: Imagine buying BTC, ETH and CAMP at a relatively low/comfortable price at certain times of the year
Immediately you sell it at a profit/higher price and not at a loss, the profit itself is subject to capital gains tax. You need to add the profit to your other income and apply the PIT rate to it
TLDR: In calculating your taxable income for the entire year in crypto, all gains and profits you've made will be summed up. If you've made losses, you are allowed to deduct them
Any deductions in form of tax reliefs will be made and the balance will be subject to the rates above
Collection Of Tax
At the end of each financial year, you are required to do self assessment with the tax collecting body.
Self assessment involves reporting all gains you’ve had in a year, applying the necessary deductions before calculating your tax
Final Thoughts
Good Citizens: Since tax is compulsory, non-payment is tax evasion and will attract severe punishment under Nigerian Laws
Coconut Heads: You can structure your affairs to pay the least possible tax and practice tax avoidance
Which are you?
