FG wants Binance to pay $79bn for economic loss fine, $2bn tax

The Nigerian government has asked Federal High Court in Abuja to instruct Binance Holdings Limited to pay $79,514,055,594.40 and N231 million for economic losses allegedly caused by its operations in Nigeria, as well as $2,001,000,000 in income tax for 2022 and 2023.

The federal government had through FIRS and the Economic and Financial Crimes Commission charged the company with tax evasion, money laundering, and foreign exchange violations.

In the new case, the Federal Inland Revenue Service (FIRS) is imposing demands and alleged liabilities, which include a 10% penalty for non-payment of income tax for the years 2022 and 2023. Additionally, there is a 26.75% interest rate applied—reflecting the prevailing Central Bank of Nigeria (CBN) lending rate per annum—starting from January 1, 2023, and January 1, 2024, respectively, along with other charges.

Binance, a cryptocurrency exchange platform, along with two of its executives, Tigran Gambaryan and Nadeem Anjarwalla, is accused in this lawsuit of contravening Nigerian laws by failing to register with the FIRS for tax compliance and causing economic losses to the country during the period under review.

The lawsuit alleges that Binance deliberately shrouded its business activities in secrecy despite having a “significant economic presence” in Nigeria.

The violations cited include breaches of Nigeria’s Companies Income Tax (CIT) Act, the Federal Inland Revenue Service (Establishment) Act 2007, the CBN Regulatory Framework for Mobile Money Services, and the CIT Significant Economic Presence (SEP) Order.

The SEP Order, referenced in the lawsuit, sets out conditions under which foreign and non-resident companies providing digital services, among others, become liable for taxation in Nigeria.

The order stipulates that a foreign company has a significant economic presence in Nigeria if it derives an annual gross turnover of at least N25 million or its equivalent in other currencies from digital activities, among other criteria.

The SEP Order was signed by former Minister of Finance, Budget, and National Planning, Mrs. Zainab Shamsuna Ahmed, and gazetted by the federal government in May 2020.

In an affidavit deposed by Jimada Mohammed Yusuf, a member of the Special Investigation Team from the Office of the National Security Adviser, who investigated Binance’s business activities alongside officials from the FIRS and other regulatory agencies, the federal government discovered that Binance had been operating in Nigeria for over six years without registration.

According to Yusuf, this was allegedly confirmed by Gambaryan and Anjarwalla during a meeting with the Securities and Exchange Commission (SEC) in 2024.

He further claimed that in a letter dated February 20, 2024, Binance admitted to having 386,256 active users from Nigeria on its platform, with a trading volume of $21.6 billion and a net revenue of $35.4 million for the calendar year 2023.