In a recent statement, crypto exchange KuCoin announced that they would begin collecting a 7.5% value-added tax on trading fees from Nigerian users starting on July 8. This decision is said to be in compliance with an important regulatory update in the country.
The 7.5% VAT will be applied to each trade’s transaction fees, signaling a potential increase in the cost of trading for users in Nigeria. While KuCoin has taken this step, other platforms like ByBit and Binance have not yet implemented similar tax measures for their users.
Local industry stakeholders view this VAT tax move as a positive step towards crypto growth in Nigeria. One user expressed optimism, stating that the government’s willingness to tax crypto exchanges could generate revenue for the nation and support the technology sector.
Nigeria has been a hotspot for crypto adoption, ranking second on Chainalysis’ Global Crypto Adoption Index in 2023. However, the government’s recent actions have raised concerns among traders and exchanges. Earlier this year, the government accused crypto exchanges of manipulative activities causing foreign exchange issues.
Following the accusations, several exchanges, including KuCoin, suspended their peer-to-peer activities involving the Nigerian naira. The government has since increased its scrutiny and skepticism towards digital assets, leading to legal actions against platforms like Binance on charges of tax evasion and money laundering.
The imposition of a 7.5% value-added tax on trading fees by KuCoin signifies a challenging time for crypto trading in Nigeria. While the move may pave the way for regulatory clarity and government revenue, it also raises concerns about the impact on traders and exchanges operating in the country. As the Nigerian government continues to navigate its stance on the crypto industry, it is essential for stakeholders to closely monitor regulatory developments and adapt to the changing landscape to ensure compliance and sustainable growth.