How to Report Bitcoin Gains in Nigeria: A Complete Tax Guide for Crypto Investors

As cryptocurrency adoption surges in Nigeria, understanding how to report Bitcoin gains has become crucial for investors. The Federal Inland Revenue Service (FIRS) now requires Nigerians to declare crypto profits as taxable income. This comprehensive guide breaks down the step-by-step process for compliantly reporting your Bitcoin gains while avoiding penalties.

Understanding Cryptocurrency Taxation in Nigeria

Under Nigeria’s Finance Act 2021, cryptocurrencies like Bitcoin are classified as “chargeable assets” for Capital Gains Tax (CGT). You’ll owe taxes when:

• You sell Bitcoin for fiat currency (e.g., Naira)
• You trade Bitcoin for another cryptocurrency
• You use Bitcoin to purchase goods/services

Tax Rate: A flat 10% CGT applies to gains exceeding ₦100,000 in a tax year. Losses can be carried forward to offset future gains.

Step-by-Step Guide to Reporting Bitcoin Gains

1. Calculate Your Gains:
   • Determine acquisition cost (purchase price + transaction fees)
   • Subtract this from disposal value (sale price – fees)
   • Example: Bought 0.1 BTC at ₦5,000,000 → Sold at ₦7,500,000 → Gain = ₦2,500,000
2. Document All Transactions: Maintain records of:
   • Exchange receipts
   • Wallet addresses
   • Bank statements showing fiat conversions
3. File Capital Gains Tax Form:
   • Complete Form CG T1 (Capital Gains Tax Return)
   • Submit to your FIRS State Office or via FIRS e-Services portal
4. Pay Before Deadline: Taxes are due by December 31st for the preceding tax year

What Records Do You Need to Keep?

Maintain these documents for 6 years for audit purposes:

• Dated transaction history from exchanges (Binance, Luno, etc.)
• Proof of wallet ownership
• Bank transfer confirmations for deposits/withdrawals
• Calculations showing gain/loss per transaction

Common Mistakes to Avoid

• Ignoring Small Trades: All disposals must be reported regardless of amount
• Forgetting Cost Basis: Failing to include acquisition fees inflates taxable gains
• Missing Deadlines: Late filings incur 10% penalty + monthly interest
• Omitting P2P Trades: Peer-to-peer transactions are fully taxable

Penalties for Non-Compliance

Failure to report Bitcoin gains may result in:

• Minimum 10% fine on unpaid taxes
• 5% monthly interest on overdue amounts
• Criminal prosecution for tax evasion (up to 5 years imprisonment)
• Account freezes via Bank Verification Number (BVN) linking

Frequently Asked Questions (FAQ)

Do I pay tax if I hold Bitcoin without selling?

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

How are mining rewards taxed?

Mined Bitcoin is treated as income at fair market value upon receipt. You’ll pay Income Tax (up to 24%) plus CGT when sold.

Can I deduct crypto losses?

Yes. Capital losses offset gains in the same tax year. Unused losses carry forward indefinitely.

Is foreign exchange gain on crypto taxable?

Yes. If you bought Bitcoin with USD and sold in Naira, both the crypto gain and FX conversion profit are taxable.

What if I trade on international exchanges?

Nigerian residents must declare worldwide income. Use exchange records converted to Naira at CBN’s official rate.

Pro Tip: Consult a certified tax advisor familiar with Nigeria’s crypto regulations. FIRS increasingly uses blockchain analytics to track high-volume traders through centralized exchanges.