KuCoin to Collect Taxes From Nigerian Users

Crypto exchange KuCoin has announced a tax rate for all transactions executed by its Nigerian users.

In a June 3 notice, the crypto exchange revealed that starting July 8, it would deduct a 7.5% value-added tax (VAT) on transaction fees in each trade for users with information registered in Nigeria. 

Nigerians to Pay VAT on KuCoin

KuCoin clarified that the VAT would apply to transaction fees, not the transaction amount, and it would affect all trades on the platform. Hence, the net amount transaction for a user buying $1,000 worth of bitcoin would be $998.925 worth of coins because KuCoin would deduct a $1 transaction fee and a $0.075 VAT.

Two months ago, KuCoin temporarily suspended all peer-to-peer (P2P) Nigerian naira services on its platform to accelerate its compliance process in the country. The P2P halt also extended to Fast Buy services via naira cards. 

KuCoin said it would focus on becoming more compliant during the pause and looks forward to resuming the naira P2P services soon. The incoming tax deduction signifies progress in the exchange’s efforts to comply with Nigerian authorities, which clamp down on crypto entities that fail to adhere to tax rules.

One such is the crypto exchange Binance, which was sued in March by the Federal Inland Revenue Service (FIRS) for evading taxes. The FIRS accused the leading crypto trading entity of refraining from issuing VAT invoices to users to ensure prompt tax payments and failing to deduct taxes from them. In addition, Binance allegedly failed to register with the FIRS and pay taxes from its services and aided and abetted Nigerian traders in neglecting their taxes.

Nigeria’s Harsh Stance on Crypto

Although it remains unclear when KuCoin will resume its naira P2P services, the introduction of a VAT on all transactions signals it could happen soon. However, Nigeria’s harsh stance on cryptocurrencies suggests otherwise.

Since February, Nigeria has taken several measures to stabilize the naira, which has plummeted significantly against the U.S. dollar. Local authorities believe crypto exchanges facilitate the naira’s devaluation, so they have been tackling digital asset platforms to address the issue. 

One measure implemented was instructing telecom and internet service providers to limit access to crypto exchanges. Regardless, Nigeria still houses one of the fastest-growing crypto economies.