- The transaction fees, and not the overall transaction volume, will be subject to this VAT.
- Trading on KuCoin would become more expensive for Nigerians as a result.
The cryptocurrency exchange KuCoin has stated that transaction fees will henceforth be subject to a 7.5% VAT. Those Nigerian users who have completed the KYC registration process will be hit by this new charge. The transaction fees, and not the overall transaction volume, will be subject to this VAT as of July 8.
Trading on KuCoin would become more expensive for Nigerians as a result of the new VAT policy. Even if the foundation for computation is clear, there are still concerns about charging VAT while the government continues to prohibit crypto websites, including KuCoin. The stakeholders in Nigeria’s cryptocurrency ecosystem are worried about the timing and regulatory ramifications of this move.
Further Complicating Matters
The president of Nigeria’s Blockchain Industry Coordinating Committee (BICCoN), Lucky Uwakwe, brought attention to possible difficulties in implementing the new fee. He raised concerns about the government’s ability to control the transfer of tax revenues, confirm user counts, and guarantee correct trade reporting. Compliance and openness may be hampered in the absence of specific instructions on these fronts.
The Central Bank of Nigeria’s (CBN) restrictions on the conversion of cryptocurrency to fiat currency further complicate matters. Given these budgetary constraints, KuCoin’s plans for remitting the VAT collected are unclear. Given the existing rules, this situation raises the question of whether banks would process transactions using cryptocurrency.
The imposition of value-added tax on cryptocurrency transactions by KuCoin may signal a change in official stances about the legitimacy of digital assets. Several analysts think the value-added tax is a good first step toward formally recognizing cryptocurrencies as legal tender in Nigeria.
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