How to Report Bitcoin Gains in Nigeria: Your Complete Tax Guide

Understanding Bitcoin Tax Obligations in Nigeria

As cryptocurrency adoption surges across Nigeria, the Federal Inland Revenue Service (FIRS) has intensified focus on taxing digital asset profits. Reporting Bitcoin gains isn’t just good practice—it’s a legal requirement under Nigeria’s Capital Gains Tax Act. Failure to comply could result in penalties, audits, or legal consequences. This guide clarifies Nigeria’s evolving crypto tax landscape and walks you through the reporting process step by step.

Legal Framework for Crypto Taxation

Nigeria treats cryptocurrency as a capital asset, meaning profits from Bitcoin sales are subject to Capital Gains Tax (CGT). Key regulations include:

• Capital Gains Tax Act (1967): Applies a 10% tax on gains exceeding ₦500,000 in a tax year
• FIRS Guidelines (2021): Explicitly includes digital assets under taxable investments
• Finance Act (2020): Empowers FIRS to track crypto transactions through exchanges

Note: Tax laws evolve. Consult a Nigerian tax professional for personalized advice.

Step-by-Step Guide to Reporting Bitcoin Gains

1. Calculate Your Gains: Subtract purchase price and allowable expenses (exchange fees, transaction costs) from your selling price.
2. Determine Taxable Amount: Only gains exceeding ₦500,000 annually are taxable. Example: If you profit ₦700,000, tax applies to ₦200,000.
3. Complete the FIRS Self-Assessment Form: Download Form CG T1 from the FIRS portal. Declare gains under “Chargeable Assets.”
4. Pay Capital Gains Tax: Remit 10% of taxable gains via FIRS e-payment channels or designated banks. Keep proof of payment.
5. File Your Tax Return: Submit your annual return by March 31st of the following year through the FIRS e-filing platform.

Essential Documentation for Compliance

• Transaction history from exchanges (Binance, Luno, etc.)
• Bank statements showing fiat conversions
• Receipts for acquisition costs and allowable expenses
• Tax Payment Teller/Confirmation
• Digital asset wallet addresses (for audit trails)

Common Reporting Mistakes to Avoid

• Ignoring Small Transactions: All disposals must be recorded, regardless of size
• Forgetting Cost Basis: Track purchase prices meticulously—FIRS may reject “zero cost” claims
• Missing Deadlines: Late filings incur 10% penalty plus interest
• Omitting Exchange Fees: These reduce taxable gains—don’t overlook them
• Using Foreign Tax IDs: Nigerian residents must file with FIRS, not foreign authorities

Frequently Asked Questions (FAQ)

Do I pay tax if I hold Bitcoin without selling?

No. Tax applies only when you dispose of Bitcoin (sell, trade, or spend). Unrealized gains aren’t taxed.

How does FIRS track my crypto profits?

FIRS collaborates with exchanges and banks to monitor large transactions. Since 2021, Nigerian exchanges must report user data under AML laws.

Are peer-to-peer (P2P) transactions taxable?

Yes. All disposals—including P2P trades—are subject to CGT. Maintain detailed records of counterparty details.

What if I trade Bitcoin for another cryptocurrency?

This counts as a taxable event. You must calculate gains in Naira value at the time of trade.

Can I offset Bitcoin losses against gains?

Yes. Capital losses reduce your taxable gains. Report losses on Form CG T1 to carry them forward.

Staying Compliant in a Changing Landscape

With Nigeria’s SEC proposing stricter crypto regulations in 2024, transparency is paramount. Use tax software like Koinly or Accointing to automate gain calculations, and consider consulting a FIRS-certified tax advisor. Proper reporting not only avoids penalties but establishes you as a responsible participant in Nigeria’s digital economy.