Friday, 05 July 2024 04:40

Nigeria to collect 7.5% VAT on crypto transaction fees

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KuCoin, a cryptocurrency exchange, says it will commence collection of a 7.5 percent value-added tax (VAT) on transaction fees for users in Nigeria.

The company said a regulatory update in Nigeria led to KuCoin’s decision to introduce the VAT.

In a statement on July 3, the cryptocurrency platform said the deduction of the VAT would be effective from July 8.

KuCoin said for every trade, the 7.5 percent VAT will be applied to the transaction fee — not the total transaction amount.

“We are writing to inform you of an important regulatory update that impacts our users from Nigeria,” the company said.

“Starting from July 8th, 2024, we will begin collecting a Value-Added Tax (“VAT”) at a rate of 7.5%  on transaction fees in each trade for users whose KYC information is registered in Nigeria.

“Nb: The 7.5% is only charged on the 0.1%/0.05% transaction fee and not your total amount which will be remitted.”

According to KuCoin, if a user buys $1,000 worth of bitcoin with a 0.1 percent fee rate, the transaction fee would be $1.

The VAT, the crypto platform said, would be 7.5 percent of the fee which is $0.075 — the net amount for the transaction would be $998.925.

“Please note that the VAT will be applied to the transaction fees in each trade, not the transaction amount, and covers all transaction types on KuCoin platform,” the crypto exchange said.

In 2022, Zainab Ahmed, former minister of finance, budget, and national planning, had initially hinted at government’s plans to tax cryptocurrencies and other digital assets. 

In the 2023 Finance Act, the government imposed a 10 percent tax on profits from digital assets, including cryptocurrencies.

However, the particular provision of the act was not enforced.

In May, the Securities and Exchange Commission (SEC) announced plansto delist naira from all peer-to-peer (P2P) platforms.

SEC said the decision was taken to avoid the level of “manipulation” happening in the cryptocurrency space.

 

The Cable

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