Key Insights
- KuCoin announces implementation of 7.5% VAT on transaction fees for Nigerian users starting July 8.
- The source of approval for the VAT remains unclear, raising questions about its legitimacy and implementation, as well as concerns about remittance due to central bank restrictions.
- This development comes as KuCoin reports significant growth, with its global user base reaching nearly 31 million and a 106% increase in spot trading volume.
LAGOS (MarketsXplora) – Global cryptocurrency exchange KuCoin has announced plans to implement a 7.5% value-added tax (VAT) on transaction fees for users with Know Your Customer (KYC) information registered in Nigeria, effective July 8. The move has sparked uncertainty and raised questions within the Nigerian crypto community.
In a statement posted on social media platform X, KuCoin clarified that the new tax would only apply to the fee charged per transaction, not the overall transaction amount. For example, a purchase of 1,000 USDT worth of Bitcoin with a 0.1% fee (1 USDT) would incur a VAT of 0.075 USDT, resulting in a net transaction amount of 998.925 USDT.
However, the source of approval for this VAT remains unclear. It is uncertain whether the Nigerian government or an agency such as the Federal Inland Revenue Service has authorized this tax, leading to questions about its legitimacy and implementation.
Further complicating matters is the Central Bank of Nigeria’s restrictions on converting cryptocurrency to fiat currency, raising concerns about KuCoin’s ability to remit the collected VAT. Additionally, it remains unclear whether the tax applies only to peer-to-peer trades involving the naira or to all crypto transactions on the platform.
As the implementation deadline approaches, both KuCoin and Nigerian authorities are expected to provide clarification to avoid market disruptions and further confusion among users.
This development comes amid KuCoin’s recent announcements of significant growth. Earlier this year, the exchange reported a 16% increase in its global user base, reaching nearly 31 million users. The company also posted a 106% boost in spot trading volume, indicating strong user engagement.
The introduction of this VAT policy in Nigeria, one of Africa’s largest cryptocurrency markets, could have significant implications for the local crypto ecosystem and potentially influence similar moves in other jurisdictions.
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