KuCoin, a prominent cryptocurrency exchange, announced it will start collecting a 7.5% value-added tax (VAT) on transaction fees for users in Nigeria.
This decision comes in response to a recent regulatory update in the country.
In a statement released on July 3, KuCoin said the VAT deduction would be effective from July 8. The VAT will be applied specifically to the transaction fee, rather than the total transaction amount.
“We are writing to inform you of an important regulatory update that impacts our users from Nigeria,” the company stated. “Starting from July 8th, 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.”
To clarify, KuCoin explained that if a user buys $1,000 worth of bitcoin with a 0.1% fee rate, the transaction fee would be $1. The VAT on this fee would be 7.5%, amounting to $0.075, thus making the net amount for the transaction $998.925.
“Please note that the VAT will be applied to the transaction fees in each trade, not the transaction amount, and covers all transaction types on the KuCoin platform,” the crypto exchange emphasized.
This move aligns with Nigeria’s broader efforts to tax digital assets. In 2022, Zainab Ahmed, the former minister of finance, budget, and national planning, hinted at the government’s plans to tax cryptocurrencies and other digital assets.
The 2023 Finance Act included a provision for a 10% tax on profits from digital assets, including cryptocurrencies, though this specific provision has not yet been enforced.
Additionally, in May, the Securities and Exchange Commission (SEC) announced plans to delist the naira from all peer-to-peer (P2P) platforms to curb “manipulation” in the cryptocurrency space.
KuCoin’s new VAT policy marks a significant step in the regulation and taxation of digital assets in Nigeria, reflecting the government’s ongoing efforts to bring more oversight to the burgeoning crypto market.
