The Nigerian crypto community faces uncertainty after KuCoin, a prominent global cryptocurrency exchange, announced a new tax policy. Starting July 8, the cryptocurrency exchange will impose a 7.5% value-added tax (VAT) on transaction fees for users with Know Your Customer (KYC) information registered in Nigeria.
KuCoin Introduces VAT for Nigerian Users
In a post on X, KuCoin informed its Nigerian users that the new tax only applies to the fee charged per transaction and not the overall transaction amount. For instance, buying 1,000 USDT worth of Bitcoinincurs a fee of 1 USDT (0.1%), and the VAT on this fee would be 0.075 USDT, making the net transaction amount 998.925 USDT.
✅KuCoin introduces 7.5% VAT on trading fees for Nigeria Users We are writing to inform you of an important regulatory update that impacts our users from Nigeria. Starting from July 8th, 2024, we will begin collecting a Value-Added Tax (“VAT”) at a rate of 7.5% on… pic.twitter.com/Y6elL3RjFi
— KuCoin Africa (@KuCoinAfrica) July 3, 2024
The source of approval for this VAT remains ambiguous, Cointelegraph reported. It is unclear whether the Nigerian government or an agency like the Federal Inland Revenue Service authorized this tax. The lack of clarity has left many in the Nigerian crypto community questioning the legitimacy and implementation of the VAT.
Besides that, there is uncertainty about the approving authority, with concerns arising over KuCoin's ability to remit the VAT, given the Central Bank of Nigeria's restrictions on converting cryptocurrency to fiat currency. There is also uncertainty regarding whether the VAT applies solely to peer-to-peer trades involving the naira or all crypto transactions conducted on the platform.
Seeking Clarification
As the July 8 implementation deadline for the new changes approaches, KuCoin and Nigerian authorities are expected to provide an explanation to avoid further confusion and potential disruptions in the market.
Early this year, KuCoin announced that it had joined its competitors, reporting an increase in its customer base to over 30 million and doubling its spot market volumes. The crypto exchange reported that it had experienced a 16% increase in its number of users, reaching nearly 31 million users globally. In the same period, the company posted a 106% boost in spot trading volume, highlighting strong user engagement.
This article was written by Jared Kirui at www.financemagnates.com.
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