KuCoin, a cryptocurrency exchange, announced it will start collecting a 7.5 percent value-added tax (VAT) on transaction fees for users in Nigeria.
The decision follows a regulatory update in Nigeria, leading KuCoin to implement the VAT. In a statement on July 3, KuCoin announced that the VAT deduction would begin on July 8.
KuCoin clarified that the 7.5 percent VAT would apply 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 company stated.
“Starting from July 8, 2024, we will begin collecting a 7.5% Value-Added Tax (VAT) on transaction fees for users whose KYC information is registered in Nigeria.”
For example, if a user buys $1,000 worth of bitcoin with a 0.1 percent fee rate, the transaction fee would be $1. The VAT on this fee would be 7.5 percent, equating to $0.075, resulting in a net transaction amount of $998.925.
KuCoin emphasized that the VAT applies solely to the transaction fees and covers all transaction types on their platform.
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 imposed a 10 percent tax on profits from digital assets, including cryptocurrencies, though this provision has not been enforced.
In May, the Securities and Exchange Commission (SEC) announced plans to delist the naira from all peer-to-peer (P2P) platforms to mitigate “manipulation” in the cryptocurrency market.
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