5 — Fifth Schedule

[Section 79]

TAXATION OF DIGITAL AND VIRTUAL TRANSACTIONS OR ASSETS

Registration

1. A taxable person engaging in virtual assets related activities, including the exchange, trading, custody, or issuance of virtual assets, shall register with the relevant tax authority as a Virtual Assets Service Provider (VASP) for tax purposes.

Taxable transactions

2. (1) Taxable virtual assets transactions shall include—

(a) the sale, exchange, or transfer of virtual assets;

(b) mining or staking activities that generate income;

(c) airdrops, bounties, or any form of virtual asset received as compensation or reward; and

(d) any other transaction or activity relating to virtual assets.

(2) Transaction where payment for goods and services is made with virtual assets, shall—

(a) be subject to the same tax treatment as transactions conducted in fiat currency;

(b) have the same value as the goods and services, determined at the market price at the time of the transaction; and

(c) be reported as income by the person receiving such payments in virtual assets and pay taxes in accordance with the provisions of this Act.

Valuation of virtual assets

3. The value of virtual assets for tax purposes shall be determined using the prevailing market price at the time of the transaction, as determined by a recognised virtual asset exchange platform approved by the Service.

Taxpayer obligations

4. A taxable person engaged in virtual asset activities shall keep records and books as provided under section 31 of this Act and report virtual assets activities to the relevant tax authorities.

VASP reporting obligations

5. A VASP operating in Nigeria is required to—

(a) report any large or suspicious transactions involving virtual assets to the Service and the Nigerian Financial Intelligence Unit (NFIU) in accordance with existing anti-money laundering (AML) laws;

(b) obtain a Special Control Unit Against Money Laundering Certificate (SCUML Certificate) issued by the relevant authority;

(c) report any suspicious activity or transactions related to virtual assets that may involve money laundering, terrorist financing, or fraud to the Nigerian Financial Intelligence Unit (NFIU) within 48 hours;

(d) provide periodic reports of customer transactions to the Service, including but not limited to, exchange, sale, or transfer of virtual assets;

(e) maintain accurate customer information to comply with Know Your Customer (KYC) requirements; and

(f) maintain records of all customer transactions and identification data for at least seven years after the date of the last transaction.

Customer due diligence and Know Your Customer (KYC) obligations

6. VASPs shall for the purpose of this subjecting digital or virtual transactions or assets to taxation, conduct thorough customer verification, in accordance with the KYC and Anti-Money Laundering (AML) guidelines, as follows—

(a) collect personal identification details (name, address, national ID, etc.);

(b) conduct risk assessments and ongoing monitoring of transactions;

(c) implement effective internal controls to prevent money laundering and terrorist financing;

(d) report regularly, suspicious activities to the relevant law enforcement agencies;

(e) implement industry-standard cybersecurity protocols to protect customer data, transactions and assets from breaches or unauthorised access; and

(f) conduct internal audits to ensure compliance with AML/KYC, tax obligations and reporting standards.

Interpretation

7. In this Schedule—

“virtual asset” means a digital representation of value that can be digitally traded or transferred and used for payment, investment, or other financial purposes which include cryptocurrencies, tokens, and digital collectibles, but virtual assets shall not include certain types of digital currencies and assets, which are—

(a) national currencies and foreign national currencies;

(b) electronic money licensed by the Central Bank of Nigeria;

(c) instruments that provide the holder with access to products, services or benefits, such as loyalty programs and other reward systems; and

(d) digital representations of other assets whose issuance, bookkeeping, trading or settlement is provided for under the Investments and Securities Act, 2007;

“Virtual Asset Service Provider (VASP)” means a person who offers services related to the exchange, custody, or management of virtual assets on behalf of clients;

“Anti-Money Laundering (AML)” means measures designed to prevent criminals from disguising illegally obtained funds as legitimate;

“Counter-Terrorism Financing (CTF)” means efforts to prevent the financing of terrorism, including through virtual assets; and

“Know Your Customer (KYC)” means the process of identifying and verifying the identity of clients.