The news:
- Global crypto exchange KuCoin has informed its Nigerian users that it will start charging a value-added tax (VAT) of 7.5% on crypto trades on its platform.
- The exchange said users with Nigerian KYC details will pay the 7.5% VAT in addition to transaction charges which is 0.1% of the transaction.
- The VAT will be added to all kinds of transactions on KuCoin from transfers to trades.
KuCoin revealed this new development in an email to users which says the VAT addition is a regulatory update in Nigeria.
The 7.5% VAT charge will start July 8, 2024, and will be applied to all kinds of transactions on KuCoin.
However, it clarified that the VAT charged from transactions will represent 7.5% of the 0.1% it already charges as the transaction fee.
This means that if a 0.1% fee is deducted from a 1000 USDT transaction, the user will be left with 999 USDT as 0.1% of 1000 USDT is one. 7.5% of one (0.075) will then be deducted as VAT from the total transaction value, leaving the user with 998.9 USDT to send.
Nigeria first indicated its plans to tax crypto when the Finance Act of 2022 was amended to show a 10% tax on profits on digital assets, which include cryptocurrencies.
“Subject to any exceptions provided by this Act, all forms of property shall be assets for this Act, whether situated in Nigeria or not, including options, debts, digital assets, and incorporeal property generally.”
While this part of the Act is not being enforced yet, the addition of VAT might be where the country will begin.
A tough time for crypto companies
This year has particularly been very hard on crypto companies in Nigeria, with clampdowns that saw platforms like Binance and KuCoin stop naira peer-to-peer trade which helped Nigerians to trade crypto for naira easily.
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Binance, which has been in the middle of this clampdown, still has one of its employees, Tigran Gambaryan detained in Kuje prison with money laundering charges levelled against him.