Tax on Bitcoin Looms in For Nigerians As Coinbase Plans to Release Details of UK Users to the Taxman
Tax on bitcoin traders in Nigeria will soon become a reality mostly for high-income earns involved in Bitcoin Trading.
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According to the reports from Decrypt, Coinbase emailed some of it’s users saying that it must provide records on customers who had received more than £5,000 ($6,500) during the 2019-2020 tax year as part of a deal with HMRC.
In the U.K., cryptocurrencies fall under investment asset and are subject to capital gains tax, which for high-income earners can come to approximately 20% on gains.
In Nigeria, Bitcoin Trading is a now an income generating channel liable to tax according to the recent regulations released by the Securities Exchange Commission (SEC).
Read Also: What the New SEC Nigeria Regulations on Cryptocurrency Means For Cryptocurrency Trades and Operators in Nigeria.
“Any person, (individual or corporate) whose activities involve any aspect of Blockchain-related and virtual digital asset services, must be registered by the Commission and as such, will be subject to the regulatory guidelines.
Such services include, but are not limited to reception, transmission and execution of orders on behalf of other persons, dealers on own account, portfolio management, investment advice, custodian or nominee services.” — SEC Nigeria
Consequently, sooner or later there might be more details on how the tax on Bitcoin Traders will be carried out, which might require gathering users’ details across exchanges offering cryptocurrency trading to Nigerians.
While this may or not increase the popular of DEX across most countries, when most traders try to avoid tasks. There may still be room for the regulation of Decentralized Exchanges (DEX) in the future since most dark web trades go through these exchanges.
It was reported that the KuCoin hack incident saw the hacker moving his loots through popular DEX like Uniswap, avoiding the torchlight of Centralized Exchanges (CEX).
Some experts believe regulation is good for the ecosystem in Africa not tax while some others believe its education first then regulations.