The global cryptocurrency exchange platform, KuCoin introduces vat on transaction fees for Nigerian users. This means a 7.5% VAT tax on the transaction fees of all its users in Nigeria. The company made this known in a post on its X account on Wednesday that this new development will take effect on July 8, 2024.
KuCoin disclosed that the tax will range from 0.1% to 0.05%, which will be charged on transaction fees and not on the total transaction amounts. This means that if a person buys $1000 worth of crypto, with a 0.1% fee rate, the transaction fee would be $1, and the VAT would be $0.075% which is 7.5% of the transaction fee, making the net amount for the transaction $998.925.
Nigeria Authorities and Crypto Exchange Platforms
Since the start of the year, Nigerian authorities have taken a somewhat inconsistent approach to cryptocurrency regulations. While Nigerian authorities have consistently intensified their actions against cryptocurrency exchanges and peer-to-peer (P2P) transactions, particularly targeting Binance over alleged Naira manipulation, they have also shown signs of intending to regulate the industry. This move has left Nigerians wondering whether the government plans to ban crypto or allow it to thrive under regulatory frameworks.
See Also: Zedcrest Acquires RMB Nigeria Stockbrokers in a Deal Thought to be Worth ₦400 Million
There are concerns as to whether the VAT applies solely to P2P trades involving the naira or all crypto transactions conducted on the platform. Due to the uncertainty the crypto community in Nigeria faces, it is also unclear whether the Nigerian government or an agency like the Federal Inland Revenue Service (FIRS) will authorise this tax. Uncertainties arise over KuCoin’s ability to remit the VAT, given the CBN restrictions on converting cryptocurrency to Naira.
KuCoin is among the many crypto exchanges under scrutiny by the Nigerian government. Earlier in May, the platform had to shut down its peer-to-peer platform, bowing to regulatory pressure. The Nigerian authorities have also been in a prolonged legal battle with the largest crypto exchange in the world, Binance, which led to the detainment of two of the exchange’s executives.
These incidents make the new development from KuCoin confusing. Nigerian regulatory authorities will have to explain their stance on how crypto, which is banned, is supposed to be taxed. As the deadline for the implementation approaches, users expect KuCoin and the Nigerian authorities to provide clarity and explanations to avoid further confusion and potential disruptions in the Crypto market.
