Business
KuCoin Sets To Implement 7.5% VAT On Nigerian Crypto Transactions
By Benjamin Abioye
Global cryptocurrency exchange KuCoin has announced the introduction of a 7.5% value-added tax (VAT) on transaction fees for its Nigerian users, effective July 8th, 2024.
This decision comes amidst heightened regulatory scrutiny of cryptocurrency activities in Nigeria.
The VAT will be applicable to transaction fees for all types of trades on the KuCoin platform. According to a July 3rd email sent to customers, only users with KYC information registered in Nigeria will be affected.
The tax will be calculated based on the transaction fee, not the total transaction value. For instance, if a user purchases 1,000 USDT worth of BTC with a 1 USDT fee (0.1% fee rate), the VAT on the fee would be 0.075 USDT (7.5% of the fee).
The email stated, “We are writing to inform you of an important regulatory update that impacts our users from the Republic of Nigeria. Starting from July 8th, 2024, we will begin collecting a Value-Added Tax (VAT) at a rate of 7.5% on transaction fees for users whose KYC information is registered in Nigeria.”
This move follows a series of regulatory actions targeting cryptocurrency exchanges in Nigeria. In May 2024, KuCoin suspended peer-to-peer trading and fast buy services via naira card for Nigerian users in response to regulatory concerns.
At the time, the exchange indicated it was adjusting its operations to comply with local tax regulations.
It remains unclear whether KuCoin’s decision to impose this VAT charge is a proactive measure to ensure regulatory compliance or a direct response to regulatory pressure.
Additionally, KuCoin has not clarified how it intends to remit the collected VAT to Nigerian authorities, especially given the current restrictions on Nigerian banks working with crypto exchanges. The company has not responded to requests for comments.
This development is noteworthy as tax evasion is one of the charges brought against Binance in an ongoing legal action in Nigeria. In February, Nigerian authorities detained two Binance executives, alleging the company failed to pay taxes on transactions conducted through its platform.
Earlier this year, the Nigerian government began a crackdown on peer-to-peer cryptocurrency trading, citing concerns that the unregulated market could make the naira susceptible to speculation. Binance, founded by Changpeng ‘CZ’ Zhao, has been a focal point of this crackdown. Nigerian authorities have launched an investigation into the crypto exchange, accusing it of economic sabotage. The Binance case is currently being heard in a Nigerian court, with a company executive held in custody since the first quarter of 2024.
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