KuCoin’s New VAT Levy in Nigeria Raises Controversies

Popular crypto exchange KuCoin has announced that every transaction on its platform will have a Value Added Tax (VAT) rate of 7.5% on a transaction fee rate of 0.1% for KuCoin users registered in Nigeria. Notably, this entails that Nigerian KuCoin users will have slightly increased fees deducted from their trades on the platform.

As stated in the announcement on the exchange's official page on X, this VAT would be effective from July 8, 2024. "We are writing to inform you of an important regulatory update that impacts our users from Nigeria. Starting from July 8, 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," said Kucoin management.

Most importantly, users should note that the new VAT applies to the usual 0.1% transaction fee and not the whole sum the user is transacting, as explained in the announcement, "Nb: The 7.5% is only charged on the 0.1%/0.05% transaction fee and not your total amount which will be remitted."

Controversies

Interestingly, the KuCoin website was banned by the Central Bank of Nigeria (CBN), which makes it a confusing development since the affected party has restricted operations within the Nigerian axis.

In addition,  whether the new VAT will affect Nigerian KuCoin users in the diaspora remains unknown, as the CBN remained silent about lifting the ban on banks to suspend crypto transactions imposed in 2021, making the latest announcement more controversial.

Furthermore, the new charges might indicate that the ban on crypto transactions might soon end, as it seems to be one of the most feasible means through which the newly introduced tax will sound practical.

While how events unfold remains unknown, further announcements from the exchange's management will help clarify the grey areas in the new tax directives.

Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence before making any trading or investment decisions.

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