4 months ago
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KuCoin, a cryptocurrency exchange, has announced that it will start collecting a 7.5 per cent Value-Added Tax on transaction fees for users in Nigeria, effective July 8, 2024.
The platform made this disclosure in a statement posted on its X account on Wednesday.
This means that for every trade, a 7.5 per cent tax will be applied to the transaction fee, not the total transaction amount.
For example, if a user buys $1,000 worth of Bitcoin with a 0.1 per cent fee rate, the transaction fee would be $1. The VAT would be 7.5 per cent of the fee which is $0.075. The net amount for the transaction 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 per cent on transaction fees in each trade for users whose KYC information is registered in Nigeria,” the exchange said.
KuCoin clarified that the VAT will be applied to all transaction types on its platform and is a regulatory requirement for users in Nigeria.
By imposing VAT on cryptocurrency transactions, Nigeria may be taking the first step towards enforcing the broader tax regime outlined in the Finance Act.
Nigeria initially signalled its intention to tax cryptocurrency transactions in 2022 when the Finance Act was revised to include a 10 per cent tax on profits from digital assets, encompassing cryptocurrencies.
Meanwhile, on May 15, 2024, the exchange suspended all peer-to-peer (P2P) trading and fast buy services via naira card.
This decision came after the Securities and Exchange Commission stopped P2P transactions across all cryptocurrency platforms.
Cryptocurrency platforms have been subjected to intense scrutiny following the exit of Binance, which was accused by the Nigerian government of manipulating the naira-to-dollar exchange rate.
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