KuCoin, a cryptocurrency exchange, has announced that a 7.5% VAT will now be applied to transaction fees for Nigerian users who have completed the KYC registration process. This change will take effect on July 8, and is expected to make trading on KuCoin more expensive for Nigerians.
While the reasoning behind the VAT implementation is clear, there are concerns about imposing taxes on cryptocurrency transactions while the government continues to prohibit crypto websites, including KuCoin. Stakeholders in Nigeria’s cryptocurrency ecosystem are worried about the timing and regulatory implications of this decision.
Lucky Uwakwe, the president of Nigeria’s Blockchain Industry Coordinating Committee (BICCoN), has raised concerns about the government’s ability to control tax revenue transfers, confirm user counts, and ensure accurate trade reporting. The Central Bank of Nigeria’s (CBN) restrictions on converting cryptocurrency to fiat currency further complicate matters, as it is unclear how KuCoin plans to remit the collected VAT given these constraints.
The imposition of value-added tax on cryptocurrency transactions by KuCoin may indicate a shift in official attitudes towards the legitimacy of digital assets. Some analysts view the VAT as a positive step towards formally recognizing cryptocurrencies as legal tender in Nigeria.
