On July 3, 2024, KuCoin, a prominent cryptocurrency exchange, declared a significant regulatory shift impacting Nigerian traders. Starting from July 8, 2024, KuCoin will levy a 7.5% value-added tax (VAT) on transaction fees for Nigerian users verified through their Know Your Customer (KYC) data.
**KuCoin to Enforce 7.5% VAT on Transaction Fees for Nigerian Traders**
This VAT imposition of 7.5% is exclusive to the transaction fees. To illustrate, a purchase of Bitcoin worth 1,000 USDT, which incurs a standard fee of 1 USDT (0.1% rate), will now include an additional VAT of 0.075 USDT, totaling the transaction to 998.925 USDT.
KuCoin’s new directive aligns with local tax laws, upholding its dedication to regulatory compliance. The platform has advised Nigerian traders to reassess their trading approaches in light of the upcoming VAT implementation.
**Nigerian Crypto Community’s Response to KuCoin’s Ban and VAT Introduction**
Despite the announcement, KuCoin remains on the list of crypto platforms banned by the Nigerian authorities. The announcement has stirred confusion among the community, especially in the absence of clear regulatory instructions.
Lucky Uwakwe, the head of Nigeria’s Blockchain Industry Coordinating Committee (BICCoN), expressed apprehension over potential fraud and transparency issues. He raised questions about the Nigerian government’s ability to verify user accounts, ensure truthful reporting of trading activities, and guarantee correct VAT collection.
Uwakwe also pointed out the difficulties arising from the Central Bank of Nigeria’s (CBN) limitations on crypto-to-fiat conversions, pondering on KuCoin’s strategy for handling VAT payments given these restrictions.
He called for clarity on whether the VAT would be applicable to all cryptocurrency transactions or limited to peer-to-peer exchanges involving the naira, and if the CBN would allow banks to process such trades.
There’s also ambiguity regarding the VAT’s application to Nigerians trading on KuCoin from overseas.
Conversely, Rume Ophi, a local cryptocurrency analyst, views the VAT as a potentially affirmative step, interpreting it as a sign of the government’s acknowledgment of digital assets as valid financial entities.
Ophi anticipates the potential rollout of cryptocurrency regulations and the licensing of industry entities. He criticized the government for perpetuating the 2021 CBN ban, which he believes has stifled the growth of domestic exchanges and their ability to compete globally.
Ophi argued that the CBN’s stance has pushed many industry players abroad, thereby robbing Nigeria of a flourishing cryptocurrency market. He suggested that a more supportive regulatory framework could have fostered the development of local exchanges and solidified Nigeria’s standing in the international cryptocurrency arena.
**Stay Updated with Our Google News Channel**
