The approving authority for this taxation is still uncertain, as it is unclear whether it is the Nigerian government or an agency such as the Federal Inland Revenue Service (FIRS).
The world-renowned cryptocurrency exchange KuCoin has said that, starting July 8, it will start charging a 7.5% value-added tax (VAT) on transaction fees for customers with Nigerian KYC (Know Your Customer) information.
A minor increase in the fees associated with KuCoin transactions will be observed by Nigerian users as a result of the new policy, which was announced on X. It is important to note that the 7.5% VAT pertains solely to the transaction charge, not the total transaction value, and will encompass all transaction types on the KuCoin platform.
Nevertheless, the Nigerian government has presently banned KuCoin and other crypto websites. While conversing with a few Nigerian crypto stakeholders regarding the recently announced VAT levy, they are of the opinion that the development is perplexing, particularly given that the regulatory authorities have yet to speak.
Lucky Uwakwe, the President of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), expressed a number of questions and apprehensions regarding the potential for fraud and transparency in the new levy.
The Nigerian government’s verification of the number of users, accurate reporting of trade activities, and adequate remittance of the collected VAT were the subjects of Uwakwe’s inquiries.
In addition, there are apprehensions regarding KuCoin’s ability to pay the VAT, as the Central Bank of Nigeria (CBN) has implemented restrictions on the conversion of cryptocurrency to fiat. It is necessary to determine whether the VAT pertains to all crypto transactions or only to peer-to-peer trades involving naira.
The leader of the blockchain group speculated on whether the Central Bank of Nigeria (CBN) would permit banks to facilitate crypto transactions and whether the VAT would be applicable to Nigerians who reside and access KuCoin from abroad.
Based on an interview with Rume Ophi, a local crypto analyst, the VAT levy is a positive development. He speculated that it indicates the government’s acknowledgment of digital assets as a financial instrument.
Ophi expressed his skepticism regarding the imminent implementation of crypto regulations and the issuance of licenses to industry participants. He highlighted that the government failed to capitalize on an opportunity by maintaining the 2021 CBN prohibition.
Nigeria lacks exchanges that can compete with global founders, as their actions have resulted in participants migrating offshore, rather than fostering the development of the young industry, according to Ophi.
As of publication, Cointelegraph has not received any feedback from KuCoin regarding the levy, despite having reached out to the company for additional information.
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