KuCoin, a Seychelles-based cryptocurrency trading platform, announced on its official X account, on 3 July 2024, that it will impose a 7.5% value-added tax (VAT) on transaction fees for users in Nigeria, effective 8 July, 2024.
KuCoin has clarified that VAT will be applied to all transaction types on its platform as per Nigeria’s regulations.
“We are writing to inform you of an important regulatory update that impacts our users from the Republic of Nigeria. Starting from 8 July, 2024, we will begin collecting a Value-Added Tax (VAT) at a rate of 7.5% on transaction fees in each trade for users whose KYC information is registered in Nigeria,” KuCoin said on its X post.
The 7.5% fee will be applied only to the 0.1%/0.05% transaction fee, not to the total remitted amount.
For instance, if a user purchases USD 1,000 worth of Bitcoin with a 0.1% fee rate, the transaction fee would be USD 1. The VAT, at 7.5% of the fee, would be USD 0.075. Consequently, the net transaction amount would be USD 998.925.
By imposing VAT on cryptocurrency transactions, Nigeria is taking steps to broaden its tax regime as outlined in the Finance Act. This follows Nigeria’s initial measure in 2022, when it amended the Finance Act to impose a 10% tax on profits from digital assets transactions, including cryptocurrencies.
