The ongoing conflict between the Nigerian government and cryptocurrency exchange platform Binance is escalating, following the filing of a tax evasion lawsuit against the company. The charges were filed by the Federal Inland Revenue Service (FIRS) at the Federal High Court in Abuja on March 25th, 2024. The lawsuit, designated as suit number FHC/ABJ/CR/115/2024, accuses Binance of four counts of tax evasion. Senior Binance executives Tigran Gambaryan and Nadeem Anjarwalla are also implicated in the lawsuit and are currently being held in custody by the Economic and Financial Crimes Commission (EFCC).
The charges against Binance include allegations of non-payment of Value-Added Tax (VAT) and Company Income Tax (CIT), failure to file tax returns, complicity in aiding customers to evade taxes through its platform, and failure to register with FIRS for tax purposes. The lawsuit also accuses Binance of contravening existing tax regulations within Nigeria.
One of the counts in the lawsuit pertains to Binance’s alleged failure to collect and remit various categories of taxes to the federation, as stipulated by Section 40 of the FIRS Establishment Act 2007 as amended. This section explicitly addresses the non-deduction and non-remittance of taxes, prescribing penalties and potential imprisonment for defaulting entities.
The charges highlight specific instances where Binance allegedly violated tax laws, such as the failure to issue invoices for VAT purposes, thereby impeding the determination and payment of taxes by subscribers. According to the FIRS, any company that conducts business exceeding N25 million annually is obligated to pay taxes like Company Income Tax (CIT) and also collect and remit Value Added Tax (VAT). However, Binance did not adhere to these requirements, thus violating Nigerian laws and potentially facing investigation and legal action for this infraction.
The Federal Government of Nigeria is committed to ensuring compliance with tax regulations and combating financial impropriety within the cryptocurrency sector.