Crypto exchange KuCoin said it would start collecting a 7.5% value-added tax on trading fees from its Nigerian users on July 8.
According to a July 3 statement, the company said:
“From July 8, 2024, we will begin collecting a value added tax (“VAT”) of 7.5% on transaction fees on every transaction for users whose KYC information is registered in Nigeria.”
The platform explained that the 7.5% fee would be applied to the transaction fees of each transaction, and not to the transaction amount. It added that the fee covers all transaction types that Nigerian users can conduct on its platform.
KuCoin attributed its new decision to “an important regulatory update.” However, other crypto trading platforms in the country such as ByBit and Binance have not yet announced such tax measures for their users at the time of writing. CryptoSlate has contacted these companies for comment.
Local industry stakeholders said the VAT tax move suggests an opening for crypto growth in the country. One X user wrote:
“The Nigerian government has changed its position and is willing to tax crypto exchanges, generating revenue for the nation rather than opposing the technology. A welcome development, if you ask me.”
Nigeria has one of the highest crypto adoption rates in the world, ranking second in Chainalysis’s Global Crypto Adoption Index in 2023.
Yet the move comes at a time when the Nigerian government has taken a somewhat hostile stance towards the emerging industry.
Earlier this year, the Nigerian government blamed manipulative activities on crypto exchanges for currency problems. This prompted several exchanges, including KuCoin, to suspend all their peer-to-peer (P2P) activities involving the Nigerian naira (NGN).
Since then, authorities have increased their scrutiny and skepticism towards digital assets. Notably, the Nigerian government initiated legal action against Binance in March, charging tax evasion and money laundering against the global trading platform.