KuCoin, a prominent cryptocurrency exchange, has announced that it will begin collecting a 7.5% Value-Added Tax (VAT) on transaction fees for its users in Nigeria, effective July 8, 2024. The exchange made this announcement via a statement on its X account on Wednesday.
Under this new policy, the VAT will be applied specifically to the transaction fee rather than the total transaction amount. For instance, if a user buys $1,000 worth of Bitcoin with a transaction fee rate of 0.1%, the fee would be $1. Consequently, the VAT on the fee would be 7.5%, amounting to $0.075. Thus, the net transaction amount would be $998.925.
“We are writing to inform you of an important regulatory update that impacts our users from the Republic of Nigeria. Starting from July 8, 2024, we will begin collecting a Value-Added Tax (VAT) at a rate of 7.5% on transaction fees in each trade for users whose KYC information is registered in Nigeria,” KuCoin stated.
The exchange clarified that this VAT will apply to all transaction types on its platform and is a regulatory requirement for users in Nigeria.
This move to impose VAT on cryptocurrency transactions suggests that Nigeria may be initiating steps to enforce a broader tax regime as outlined in the Finance Act. The Nigerian government first signaled its intention to tax cryptocurrency transactions in 2022, revising the Finance Act to include a 10% tax on profits from digital assets, including cryptocurrencies.
Additionally, on May 15, 2024, KuCoin suspended all peer-to-peer (P2P) trading and fast buy services via naira card following the Nigerian Securities and Exchange Commission’s decision to halt P2P transactions across all cryptocurrency platforms. This suspension came amid increased scrutiny of cryptocurrency platforms, which intensified after Binance faced accusations from the Nigerian government of manipulating the naira-to-dollar exchange rate.
