Fintech

Nigeria imposes a 7.5% VAT on digital goods and services advertisements. www.theexchange.africa

The former Federal Inland Revenue Service (FIRS) chairman, Babatunde Fowler, announced Nigeria’s decision to tax digital transactions in 2019. The new legislation dubbed The Finance Act (2021) was signed on December 31, 2021.

A section on Nigeria’s Finance Act focuses on capturing value from non-resident technology companies and calls them to act as VAT collectors for digital goods and services traded within Nigeria. The minister for finance, budget and national planning, Zainab Ahmed, said during the presentation of the 2022 budget that the taxable digital platforms include apps, high-frequency trading, electronic data storage, online advertising, and several others.

In addition, Meta had already issued a notice on December 9, 2021, before releasing the new financial regulation, saying that Meta ads in Nigeria would be subject to a value-added tax (VAT) at the applicable local tax rate. The VAT applies to advertisers whose “Sold to” country on their business or personal address is set to Nigeria. Meta has 26.10 million users in Nigeria in early 2022, equivalent to 12.2 per cent of the population in Nigeria.

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Cryptofund is part of UNICEF’s innovation fund, which allows the organization to hold, receive and disburse funds in cryptocurrency. The CryptoFund is a pooled fund of bitcoin and ether, distributed only in crypto, targeting to create visibility and transparency accounting to donation distribution and investment processes.

CyrptoFund will facilitate startups registered in UNICEF’s 190 programme countries as a prototype Fund that seeks to explore the use of digital currencies in these countries. Forty-one of the nations are African.

Startups registered in the 190 countries and have an operational, open-source blockchain prototype or are willing to make their startup open source are eligible to get the fund.

The Central Bank of Kenya added that all countries in the region needed to participate in flattening the multi-layered correspondent banking structure and shortening the payment chains for a digital currency to work.

The development of CBDCs has been on the rise. According to a 2021 survey of central banks by the Bank for International Settlements (BIS), 86 per cent of central banks are in the process of researching the potential for CBDCs, 60 per cent are experimenting on them, and 14 per cent were deploying pilot projects.

The CBK has maintained the cryptocurrency ban and has not issued a digital currency due to concerns about the risks of a CBDC.

This comes after the National Treasury exempted the digital lender from a law limiting individual shareholding in microfinance to 25 per cent.

In a gazette notice signed by the Cabinet Secretary National Treasury, Ukur Yatani, the San-Francisco based fintech has been exempted from Section 19 of the Microfinance Act (for 4 years through 2025).

Currently, individuals or single entities are barred from holding more than a 25 per cent stake in a microfinance institution.

The companies that led the seed round were capital firms Distributed Global and Alter Global. Distributed Global invests mainly in blockchain companies, while Alter Global focuses on startups in emerging markets. Other firms that participated include Serena Ventures, Alameda Research, A&T Capital, MSA Capital and 4DX Ventures.

Serena Williams invested in Nestcoin to drive crypto adoption in Africa as the Nigerian startup is building products to help Africans understand and adopt crypto. Yele Bademosi and Taiwo Orilogbon co-founded Nestcoin.

According to Chainalysis, Africa’s cryptocurrency market grew by 1,200%, to US$105.6 billion, between July 2020 and June 2021. High inflation rates, weak currencies, increased unemployment rates and economic instability have supported the exponential growth of crypto in the continent.

Recently, many Nigerians trading on the Binance platform complained about initiating or completing transactions.

Some of the affected persons have taken to social media calling out crypto for “targeting Africans, especially Nigerians”, as their accounts have been suspended for reasons oblivious to them.

Some users say that they have been told to contact the Federal Bureau of Investigation (FBI) and New York Police Department to resolve transactions issues, a situation they claim to be absurd.

The CBK has also issued circulars to local commercial banks warning them against dealing with cryptocurrencies transactions or face penalties for non-compliance.

The last circular was issued in 2018 and has remained in action up until now.

While delivering the monetary policy announcement where the monetary policy committee retained the base lending rate at seven per cent for the 12th time, Dr Patrick said that their position had not changed on any of the crypto products in the market.