Federal Government Files Tax Evasion Charges on Binance

News reaching our desk revealed that just today, the federal government of Nigeria initiated criminal proceedings against Binance, one of the biggest cryptocurrency exchange platforms.

The Federal Inland Revenue Service (FIRS) announced this Monday after the charges were filed at the Federal High Court in Abuja.

Binance was accused of four counts of tax evasion in a statement signed by Dare Adekanmbi, the executive chairman of the FIRS's special adviser on media.

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It is also known that two of the exchange's senior executives, Tigran Gambaryan and Nadeem Anjarwalla, are joining Binance in the lawsuit under case number FHC/ABJ/CR/115/2024.

Several accusations have been made against Binance, including non-payment of company income tax and value-added tax (VAT), failure to file tax returns, and cooperation in helping users of its platform avoid paying taxes.

In addition to the case, the Federal Government claimed that Binance had broken one of the essential national tax laws by not registering with FIRS for tax purposes. 

As Section 40 of the FIRS Establishment Act of 2007 requires, Binance is accused of failing to collect and remit several categories of taxes to the Federation, which raises serious concerns about the charges.

Section 40 of the FIRS Establishment Act of 2007 explicitly addresses tax non-deduction and non-remittance, prescribing penalties and potential imprisonment for defaulting entities.

The charges listed specific incidents in which Binance was accused of breaking tax laws, including neglecting to provide invoices for value-added tax (VAT) purposes, which hindered subscribers' ability to calculate and pay their taxes.

"Any company that transacts business worth over N25 million annually is deemed by the Finance Act to be present in Nigeria.

"According to this rule, Binance falls into that category. So, it must pay taxes like company income tax (CIT) and collect and pay value added tax (VAT).

"But Binance did not do this properly. So, the company broke Nigerian laws and could be investigated and taken to court for this infraction," Mr Adekanmbi said.

He stated that the government's commitment to enforcing tax regulations and combating financial impropriety in cryptocurrency remains steadfast.

FIRS stated that it is committed to efficiently enforcing applicable tax laws. FIRS is authorised to evaluate, gather, and account for revenue accumulated by the Federation.

Back Story

In February, two executives from Binance traveled to Nigeria to hold talks with the country's authorities following the crackdown on the cryptocurrency industry. The Nigerian government blocked the websites of Binance and other cryptocurrency companies to stop the "ongoing manipulation" of the foreign exchange market and the illicit transfer of funds to unverified sources.

The Office of the National Security Adviser (ONSA) confirmed that Binance was the subject of an investigation after Nigerian authorities detained the two executives, Nadeem Anjarwalla and Tigran Gambaryan. Following that, they were charged before a Magistrate Court in Abuja.

On February 28, the court gave the Economic and Financial Crimes Commission (EFCC) a 14-day remand order for the two. Additionally, the court directed Binance to provide the Nigerian government with data regarding Nigerian users trading on its platform.