VASPA Submits Formal Request to Central Bank of Nigeria Seeking Extension and Strategic Reforms for the VASP Regulatory Sandbox
A Crucial Call for Participation in a Survey from the Virtual Asset Service Providers Association (VASPA)
Press Release
VASPA
/
Nigeria
VASPA Submits Industry Response to Nigeria Revenue Service on Virtual Asset Tax Guidelines
Author
VASPA Admin
Post Date
September 2, 2026
ABUJA FCT, NIGERIA — September 1, 2026 — The Virtual Asset Service Providers Association (VASPA) has officially submitted a comprehensive stakeholder position paper to the Executive Chairman and the Tax Policy and Advisory Department of the Nigeria Revenue Service (NRS). The submission addresses Information Circular No. 2026/21, which outlines the newly issued Guidelines on the Taxation of Virtual Assets.
Drafted following the NRS stakeholder engagement on August 20, 2026, VASPA’s submission aligns with the Service’s goal of formalizing the sector while warning against specific mechanisms that could inadvertently drive Nigeria’s digital asset market underground.
Commendation for Progressive Fiscal Architecture
VASPA formally commends the NRS for several highly sophisticated provisions that place Nigeria ahead of many global peers in conceptual clarity:
- Dollar-Referenced Gain Methodology: Computing gains in USD to isolate and exclude Naira depreciation ensures taxpayers are taxed on genuine economic profit, not inflation.
- Precise Non-Taxable Events: Correctly recognizing wallet-to-wallet transfers, staking lock-ups, NFT minting, and wrapped-token conversions as non-disposals.
- Token-Native Remittance: Permitting withheld tax and duty to be remitted in the originating token, minimizing friction.
- Annual Netting & Loss Carry-Forward: Adopting self-assessment and indefinite loss carry-forwards suitable for a volatile asset class.
The Primary Threat: The 1.5% Stamp Duty on Token/Fiat Conversions
VASPA’s central concern is the imposition of a 1.5% Stamp Duty on every fiat-to-token and token-to-fiat conversion. Rather than a conventional stamp duty, this functions as a profit-blind turnover tax.
Because it is levied on the transferee at each leg, a single round-trip trade exposes the underlying value to an effective 3% levy on gross value—independent of any gain. This tax is non-creditable and represents double taxation that will instantly make market-making, arbitrage, and cross-border settlement uneconomic on regulated Nigerian platforms.
Empirical Evidence of Capital Flight:
- India: A lighter 1% Tax Deducted at Source (TDS) on transfer value resulted in an 81% drop in domestic exchange volume within four months. Over $42 billion migrated offshore, taking 3 to 5 million users to unregulated channels.
- Kenya: A similar 3% Digital Asset Tax raised only KSh1.1 billion ($8.5 million) in 21 months before being repealed in 2025. Kenya replaced it with a 10% excise tax strictly on VASP service fees.
- Global Norms: Jurisdictions like South Africa, the UK, and the US tax capital gains or income, completely avoiding turnover taxes on gross transaction value.
Additional Operational and Fiscal Bottlenecks
- Gross Withholding Tax (WHT): The 1% WHT on gross disposal proceeds withdraws working capital even on loss-making trades, creating a systemic refund overhang for ordinary users.
- Taxing Illiquid Rewards: Taxing staking, mining, and DeFi rewards at fair market value upon receipt creates immediate Naira tax liabilities for assets that users cannot yet liquidate.
- Punitive Penalties: The non-compliance penalty of ₦10,000,000 for the first month and ₦1,000,000 for subsequent months is disproportionately severe for a nascent, capital-constrained industry.
- Offshore Migration Risk: Placing the entire collection burden on licensed onshore VASPs incentivizes users to migrate to offshore exchanges or unregulated bilateral P2P channels, defeating the formalization objective.
VASPA’s 8-Point Recommendation Plan
To ensure the regime is globally competitive and successfully retains onshore liquidity, VASPA recommends:
- Abolish or Re-base the Stamp Duty: Eliminate the 1.5% gross-value duty in favor of gains-based taxation. If a transaction charge is required, adopt the Kenyan model: tax the VASP service fee (margin), not the user’s trade value.
- Drastic Duty Reduction: If a gross duty must be retained, reduce it to a creditable 0.05%–0.1% on a single leg.
- Gains-Based WHT: Levy the 1% WHT on determinable gains rather than gross proceeds, paired with an automated refund system.
- Defer Illiquid Tax: Defer the taxation of locked or illiquid rewards until the point of disposal or liquidity, or permit payment in kind.
- Prioritize CARF Implementation: Establish enforcement parity through the OECD Crypto-Asset Reporting Framework (CARF) before imposing heavy local levies, protecting onshore competitiveness.
- Graduated Penalties: Implement a transition-period penalty regime featuring a first-instance cure window.
- Infrastructure Runway: Provide a defined operational runway to build token-native withholding systems and publish approved price aggregators.
- Fiscal Stabilization Period: As detailed in the Project Green-White-Green Whitepaper, offer a targeted, time-bound tax predictability window for operators who rapidly secure full domestic licensing, prioritizing long-term revenue over short-term friction.
“The choice the Guidelines present is not between taxing the sector and not taxing it but between taxing a high rate on a base that leaves, and a sensible rate on a base that stays and grows. The international evidence on which of those raises more revenue is, we submit, already available for all to see.“
Aligning with Nigeria’s pioneer intercommunity committee, the Blockchain Industry Coordinating Committee of Nigeria (BICCON), VASPA has proposed the formation of a Joint NRS–Stakeholders Technical Working Group to refine implementation and data-sharing.
Furthermore, VASPA strongly urges the inclusion of a formal 12-to-18-month review clause in the Guidelines to assess onshore volume retention and revenue metrics objectively.
The submission is formally signed by VASPA Executive Chair Franklin Peters, Lead of Policy and Regulatory Affairs Favour Uche, and Secretary-General Hissan Siita Sofo.
The complete submission, available here in PDF, has been delivered through the office of the Executive Chair, Nigeria Revenue Service (NRS), with attention to the Director, Tax Policy and Advisory Department.
Media Enquiries:
Policy & Regulatory Affairs Unit, VASPA
policy@vaspa.org
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