KuCoin, a leading cryptocurrency exchange, has announced the commencement of a 7.5 percent value-added tax (VAT) on transaction fees for its users in Nigeria.
News About Nigeria reports that the decision comes in response to a recent regulatory update in the country.
In a statement released on Wednesday, July 3, KuCoin indicated that the VAT deduction would take effect from July 8.
The company clarified that the VAT would be applied to the transaction fee, not the total transaction amount.
“We are writing to inform you of an important regulatory update that impacts our users from Nigeria,” the statement read.
“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 illustrate the impact, KuCoin provided an example: if a user purchases $1,000 worth of bitcoin with a 0.1 percent fee rate, the transaction fee would be $1.
The VAT would be 7.5 percent of the fee, amounting to $0.075.Consequently, the net amount for the transaction would be $998.925.
The company stressed, “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.”
This move aligns with the Nigerian government’s increasing focus on regulating and taxing digital assets.
In 2022, former Minister of Finance, Budget, and National Planning, Zainab Ahmed, hinted at plans to tax cryptocurrencies and other digital assets.
The 2023 Finance Act imposed a 10 percent tax on profits from digital assets, including cryptocurrencies, although this provision has yet to be enforced.
In a related development, the Securities and Exchange Commission (SEC) of Nigeria announced in May plans to delist the naira from all peer-to-peer (P2P) platforms, citing concerns over “manipulation” within the cryptocurrency market.
