KuCoin, a leading global cryptocurrency exchange, has announced that effective July 8, the platform will begin collecting a value-added tax (VAT) at a rate of 7.5% on transaction fees for users whose KYC (Know Your Customer) information is registered in Nigeria.
This new policy, announced on X, means that Nigerian users will see a slight increase in the fees associated with their trades on KuCoin. Notably, the 7.5% VAT is only applied to the transaction fee, not the total transaction amount and will cover all transaction types on the KuCoin platform.
Concerns over VAT policy
However, KuCoin is among the crypto websites currently banned by the Nigerian government. Speaking with some Nigerian crypto stakeholders about the announced VAT levy, they believe the development is confusing, especially as the regulatory authorities have yet to speak.
Lucky Uwakwe, President of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), raised several queries and concerns about potential fraud and transparency issues with the new levy.
Uwakwe raised questions on how the Nigerian government will verify the number of users, ensure accurate reporting of trade activities, and confirm that the collected VAT is adequately remitted.
Additionally, there are concerns about how KuCoin will pay the VAT, given the Central Bank of Nigeria (CBN)’s restrictions on converting crypto to fiat. Clarification is needed on whether the VAT applies to all crypto transactions or just peer-to-peer trades involving naira.
The blockchain group leader speculated whether the CBN would allow banks to facilitate crypto trades and if the VAT would apply to Nigerians living and accessing KuCoin abroad.
Optimism for future crypto regulations
In an interview with local crypto analyst Rume Ophi, he said the VAT levy is a welcome development. He speculated that it signals the government’s recognition of digital assets as a financial instrument.
Ophi said he wouldn’t be surprised if crypto regulations were soon implemented and licenses were granted to industry players. He emphasized that the government missed an opportunity by continuing the 2021 CBN ban.
According to Ophi, Nigeria does not have exchanges that can compete with global founders because, rather than building the young industry, their actions caused players to migrate offshore.
Cointelegraph has contacted KuCoin for more information about the levy but has yet to receive feedback at publication.