KuCoin to Implement 7.5% VAT on Fees for Nigerian Users from July 8

Nigerian users of KuCoin will have to pay extra 7.5% VAT on transaction fees starting July 8, causing concerns amid crypto bans.

HIGHLIGHTS

• Starting the eighth of July, KuCoin will impose a value-added tax (VAT) of 7.5% on transactional costs in Nigeria.
• However, the VAT only applies to those who register under KYC in Nigeria and their transaction charges.
• Some stakeholders say that this VAT is ill-timed and has regulatory implications, especially when government authorities are implementing an ongoing ban.

KuCoin cryptocurrency exchange announced the implementation of a 7.5 percent value-added tax (VAT) for trading fees. This new tax affects users in Nigeria who have completed Know Your Customer (KYC) registration. The tax authority charges VAT based on transactional fees not capital inflows or outflows from investors.

Read more:- What Are Reflection Tokens In Crypto, And How Do They Work?

KuCoin’s Nigerian Fees to Be Subjected to VAT

In fact, through increasing the cost associated with transaction fees, this amounts to a direct move by KuCoin targeting Nigerian traders using their platform. Yet it leaves questions lingering behind these calculations since even amidst ongoing government ban on cryptocurrencies such as kucoin.in websites among others applying VAT seems misleading. 

This decision’s timing and its regulatory implications raise concern among Nigeria’s major players in the crypto sector, including individuals who store assets electronically and facilitators such as exchanges. 

President of Blockchain Industry Coordinating Committee of Nigeria (BICCoN), Lucky Uwakwe, discussed the possible issues that the implementation of the brand new tax may face. He questioned how the government would determine user counts, track accurate trade reporting, and remit collected taxes. In this situation where there are no clear directions on these aspects, it will be difficult for BIR to ensure compliance and transparency.

The Central Bank of Nigeria (CBN) adds further complexities by imposing that people cannot exchange cryptocurrencies into fiat currencies. KuCoin has not yet revealed how it plans to remit the collected VAT considering these financial constraints. This results in a situation where banks might conduct crypto-related transactions based on existing rules or policies.

CBN Ban Limits Nigeria’s Crypto Growth

It could also imply that KuCoin has changed its attitude toward recognizing digital assets with a view for taxation by introducing VAT on crypto transactions. According to Rume Ophi, a local crypto analyst, VAT levy is positive because it would lead to formal acceptance of cryptocurrencies as legitimate financial instruments within the Nigerian context. Based on that analysis, he believes future legislation and licensing may occur in this industry at some point.

However, this continues to be a major obstacle, given the ongoing prohibition from CBN since 2021. This is discouraging local cryptocurrency exchange growth and pushing industry players to prefer better conditions in other countries. Ophi said that she missed opportunities because of very strict government actions which have choked the baby’s breath of Nigeria’s emerging crypto industry.

People believe that this tax might be a precursor for more extensive crypto regulation. These steps permit banks to conduct transactions involving cryptocurrencies outside the realm of P2P deals. Nonetheless, no user or stakeholder has come out to clear up all doubts on this matter thus leaving people speculating.