Fed Govt initiates legal action against Binance for tax evasion

The Federal Government on Monday initiated proceedings against Binance, a prominent cryptocurrency exchange platform over tax evasion.

The Federal Inland Revenue Service, FIRS, filed the charges in the Federal High Court in Abuja.

In the suit, filed under the number FHC/ABJ/CR/115/2024, FIRS accused Binance of four counts of tax evasion, claiming that it was a decisive move aimed at upholding fiscal responsibility and protecting the country’s economic integrity.

Tigran Gambaryan and Nadeem Anjarwalla, both senior executives of Binance who are currently in the custody of the Economic and Financial Crimes Commission, have joined the cryptocurrency company as second and third defendants in the lawsuit.

Binance is facing charges related to not paying Value-Added Tax, Company Income Tax, not filing tax returns, and assisting customers in avoiding taxes by using its platform.

The Federal Government also charged Binance in the lawsuit with breaking national tax laws and failing to register with FIRS for tax purposes.

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Section 40 of the FIRS Establishment Act 2007 stipulates that Binance is required to collect and remit various categories of taxes to the federation. This is one of the counts in the lawsuit.

Section 40 of the Act explicitly addresses non-deduction and non-remittance of taxes, imposing penalties and potential imprisonment on defaulting entities.

The charges go on to detail specific instances in which Binance is accused of violating tax laws, such as failing to issue VAT invoices, obstructing subscribers’ ability to determine and pay taxes.

The Finance Act defines a company as present in Nigeria if it transacts more than N25 million in annual business.

Binance fits that description based on this rule. As a result, it must pay taxes such as Value Added Tax, VAT, and Company Income Tax, CIT.

However, Binance handled this improperly. Therefore, the company violated Nigerian laws, and as a result, Adekanmbi said, it may be looked into and prosecuted for this offense.

By the law that established it, FIRS, and other provisions, FIRS is authorized to assess, collect, and account for revenue accruing to the Federation, as well as to administer relevant tax laws.

Binance pleaded guilty to violating anti-money laundering laws in the United States in late 2023, agreeing to a plea bargain that cost the company $4.3 billion.

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