Taxing a client's virtual asset gains and losses
How a Nigerian company client's virtual asset losses are ring-fenced against virtual asset gains, and the monthly returns service providers file.
By Achekam · · 5 min read · For Accountants & audit firms in Nigeria
The client's trading business had a good year. Its treasury did not. A director moved surplus cash into crypto assets in the first quarter, the market fell, and the holdings were sold at a substantial loss. At the year-end meeting the finance manager has a simple proposal: set the crypto loss against the trading profit and reduce the tax bill.
Under the NRS's current reading of the Nigeria Tax Act, that proposal does not work. Virtual asset losses sit in their own box. A firm advising clients that hold, trade or deal in virtual assets needs to know where the walls of that box are, and which clients carry extra filing duties on top.
Virtual asset losses only offset virtual asset gains
The NRS's information circular on the ascertainment of income tax of companies addresses the point directly. It says a chargeable loss from disposing of virtual assets may only be deducted from chargeable gains on virtual assets. Any excess is carried forward against such gains in later years, and there is no offset against assessable profits from other business streams.
Three consequences follow for a company client:
- No relief against trading profits. The finance manager's proposal fails: the loss cannot reduce the tax on the trading business.
- Relief only within the asset class. Gains on other virtual asset disposals in the same year absorb the loss first.
- A carried-forward balance to track. Whatever remains unused waits for future virtual asset gains, and someone has to keep that balance accurate year after year.
The circular's treatment of virtual assets sits alongside its general rule on trade losses. There, the NRS says a company's trade loss can be deducted only from the trade or business in which the loss was incurred, starting with the assessable profits of the first year of assessment after the loss and continuing in later years until the loss is fully recouped. Both rules reflect the same idea: losses are kept with the activity that produced them.
Monthly returns for service providers
Clients that hold virtual assets as an investment are one thing. Clients that provide virtual asset services are another. The NRS FAQ says Virtual Asset Service Providers must submit monthly returns detailing transactions, customer information and asset values to the relevant tax authority, in addition to their standard annual returns.
For a firm with such a client, that monthly duty changes the shape of the engagement:
| Client type | What the firm should expect |
|---|---|
| Company holding virtual assets as investments | Track gains, losses and the carried-forward balance in the annual computation |
| Company trading virtual assets as part of its business | The same ring-fencing, with more transactions and valuations to evidence |
| Virtual Asset Service Provider | Monthly returns on transactions, customer information and asset values, plus annual returns |
A service provider's monthly return depends on systems that capture customer and transaction data reliably. The firm's first question should be whether the client's platform can produce that data, not whether the firm can fill in the return.
The NRS guidelines on virtual assets
The NRS Tax Guides page publishes its current guidelines and information circulars, including Guidelines on taxation of Virtual Assets, whose file name carries the date 31-7-26. The NRS library of tax guides and circulars is where those guidelines, and the company income tax circular discussed above, can be downloaded.
Read the guidelines before advising on any specific transaction. The circular addresses how losses are treated in a company's computation; the guidelines are the place to look for how the NRS approaches the taxation of virtual assets more broadly. Where they differ from what the client has been told elsewhere, the NRS's published guidance is the starting point for any discussion with the authority.
What Achekam computes, and what stays in the working papers
Once its rules are approved, Achekam's Revenue Service Centre computes Nigerian company income tax with the Development Levy and the minimum effective tax rate check, as well as VAT, withholding tax, capital gains and stamp duty. Staff open a Nigerian tax profile for the client and start returns that move through prepare, review and approve by different people. Some specialised regimes are refused as assessment required, and some sectors carry a warning that sector rules are not in the rule book.
The ring-fencing of virtual asset losses and the carried-forward balance should sit in a working paper the firm prepares and reviews itself, with the result reconciled to whatever figure flows into the return. That keeps the reasoning visible to the reviewer, whatever the computation shows. The broader list of what Achekam does not compute is set out in Nigerian and Kenyan taxes Achekam will not compute, and the company tax computation in company income tax from 2026.
Documenting valuations and positions
Virtual asset positions are judgement-heavy. Values move quickly, records come from exchanges and wallets rather than banks, and the classification of an activity, as investment, trading or service provision, can decide which duties apply.
For each such client, record:
- The activity classification and the facts it rests on.
- The source of each valuation: which exchange or price source, at what date and time.
- Disposals in the year with proceeds, cost and the resulting gain or loss.
- The carried-forward loss balance, opening and closing, reconciled each year.
- Any return the client files monthly, if it is a service provider.
Where the treatment is uncertain, open a technical consultation in Achekam on the engagement. Staff can take it from question to conclusion and closure, and if partners disagree, record each position, the escalation and the resolution. That record matters if the NRS later questions how a gain was measured or why a loss was carried forward.
Ask every company client whether it held or disposed of any virtual assets during the year, and whether any part of its business provides virtual asset services. For each yes, open a working paper for the ring-fenced loss balance and read the NRS guidelines before the return is prepared.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
