By Emmanuel Nduka
PwC Nigeria has identified several unresolved legal and practical issues in Nigeria’s new framework for taxing virtual assets, warning that ambiguities in the rules could increase compliance costs and create difficulties for taxpayers, businesses and Virtual Asset Service Providers (VASPs).
The professional services firm said the guidelines recently issued by the Nigeria Revenue Service (NRS) provide greater clarity on the taxation of digital assets but leave important questions unanswered, particularly regarding transfers between wallets, asset valuation, withholding tax and the extensive compliance obligations placed on VASPs.
PwC raised the concerns in a tax alert titled, “Taxing the Intangible: A Critical Analysis of the NRS Guidelines on Taxation of Virtual Assets”.
The NRS, formerly known as the Federal Inland Revenue Service, issued Information Circular No. 2026/21, titled “Guidelines on the Taxation of Virtual Assets,” on July 31, marking the first comprehensive administrative framework specifically addressing the taxation of virtual assets in Nigeria.
One of the major issues highlighted by PwC is the scope of the safe harbour provided for transfers between wallets belonging to the same taxpayer.
Under the guidelines, transfers between wallets owned by the same individual are not treated as taxable disposals. PwC, however, noted that the relief does not appear to extend to companies or partnerships.
The firm said the limitation could create practical difficulties for businesses that maintain multiple wallets and routinely move virtual assets between accounts under their ownership as part of treasury or operational activities.
Another area of concern is the valuation of virtual assets for tax purposes. The guidelines require prices to be obtained from an “aggregator approved by the Service”. PwC noted, however, that the NRS has yet to publish a list of approved aggregators.
According to the firm, the absence of an approved list could leave taxpayers and VASPs uncertain about which pricing sources qualify for determining the value of digital assets for tax calculations, reporting and compliance purposes.
PwC also raised concerns about the interaction between withholding tax and income tax under the new regime.
The guidelines require VASPs to withhold one per cent of gross disposal proceeds from specified virtual asset transactions, while income tax is imposed on gains arising from the disposal of such assets.
The firm warned that the two mechanisms would need to be carefully reconciled during annual tax filings to ensure that taxpayers do not end up being effectively over-taxed.
“The interaction between the WHT on gross proceeds and the income tax on net gains will require careful reconciliation on annual returns to avoid over-taxation,” PwC stated.
The guidelines also impose wide-ranging tax administration responsibilities on VASPs. These include withholding tax on qualifying disposals, collecting stamp duty, enforcing Tax Identification Number requirements before account activation, filing tax returns and maintaining records of transactions.
Failure to comply attracts a penalty of N10 million for the first month of default and N1 million for every subsequent month.
PwC questioned whether it is appropriate to place such extensive tax-administration responsibilities on VASPs when similar obligations are not necessarily imposed to the same extent on other financial market intermediaries, including bureaux de change and stock exchanges.
The firm also questioned the legal basis for imposing withholding tax obligations on VASPs outside the provisions of the Withholding Tax Regulations 2024, adding another layer of uncertainty to the implementation of the new regime.
The concerns come as the Federal Government moves to formalize the taxation and broader regulation of Nigeria’s rapidly expanding digital asset market.
While some cryptocurrency investors, traders and industry participants have welcomed the clearer framework for taxing virtual assets, concerns remain that additional tax liabilities and compliance requirements could increase the cost of doing business and potentially discourage investment and innovation.
There are also outstanding questions over the tax treatment of airdrops and other forms of digital asset receipts, underscoring the difficulty of applying conventional tax principles to financial products that continue to evolve rapidly.
The new tax framework follows President Bola Ahmed Tinubu’s signing of the Presidential Executive Order on Virtual Assets Coordination, 2026, which established a coordinated regulatory framework covering cryptocurrencies, stablecoins, tokenized assets and other digital financial products.
Meanwhile, the Digital Assets Coalition has warned that the new tax regime could have unintended consequences for Nigeria’s virtual asset ecosystem.
The coalition, which represents participants and operators in the digital asset industry, said virtual assets have become an important channel for international payments, remittances, savings and income generation, particularly among young Nigerians.
It described Nigeria as one of the largest virtual asset markets in Sub-Saharan Africa and urged policymakers to strike a balance between revenue mobilization and the need to preserve investment, innovation and competitiveness within the sector.
The emerging debate reflects a wider challenge facing policymakers: how to bring a fast-growing digital economy into the tax net without creating rules that are excessively costly to administer, difficult for businesses to comply with or capable of driving legitimate digital asset activity away from the formal economy.
For taxpayers and VASPs, PwC’s analysis suggests that the immediate challenge will be navigating the new requirements while awaiting further clarification from the NRS on issues including asset valuation, withholding tax, corporate wallet transfers and other unresolved aspects of the framework.
