July 04, (THEWILL) – KuCoin, a global cryptocurrency exchange, has announced that effective July 8, the platform will effect collection of a value-added tax (VAT) at a rate of 7.5% on transaction fees for users whose Know Your Customer (KYC) information is registered in Nigeria.
“We are writing to inform you of an important regulatory update that impacts our users from the Republic of Nigeria”, the platform wrote in an email to subscribers
“Starting from July 8th, 2024, we will begin collecting a Value-Added Tax (VAT), at a rate of 7.5 percent on transaction fees in each trade for users whose KYC information is registered in Nigeria”, KuCoin said on Wednesday, in a post on X.
However, it clarified that the VAT charged from transactions will represent 7.5% of the 0.1% it already charges at the transaction fee.
This means that if a 0.1% fee is deducted from a 1,000 USDT transaction, the user will be left with 999 USDT as 0.1% of 1,000 USDT is one. 7.5% of one (0.075) will then be deducted as VAT from the total transaction value leaving the user with 998.9 USDT to send.
Some Nigerian crypto stakeholders have raised concerns over the announcement by KuCoin since the platform is among the crypto websites currently banned by the Nigerian government.
President of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), Lucky Uwakwe, raised concerns about potential fraud and transparency issues with the new levy.
But Chimezie Chuta, founder and coordinator of Blockchain Nigeria User Group, said, “What KuCoin is doing is probably part of the licensing conditions. They cannot collect tax from an unlicenced entity. Every other exchange will see this and need to follow suit.
“KuCoin was doing P2P before, but they had to stop. Now that they have given this requirement, it means they have spoken with the government, and this is part of their compliance requirement.”
Although, Nigeria first indicated its plans to tax crypto when the Finance Act of 2022 was amended to show a 10% tax on profits on digital assets, which include cryptocurrencies.
“Subject to any exceptions provided by this Act, all forms of property shall be assets for this Act, whether situated in Nigeria or not, including options, debts, digital assets, and incorporeal property generally”, the Act read.
However, Dare Adekanmbi, Special Adviser on Media to the FIRS executive chairman, Zacch Adedeji, said KuCoin’s decision to collect VAT has demonstrated readiness to comply with Nigeria’s extant tax laws and should be commended.
“We at FIRS are glad that corporate organisations are showing readiness to comply with the country’s laws as far as revenue collection is concerned. This is what a responsible corporate body should do without being prompted or press-ganged”, he said.
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