KuCoin, a prominent cryptocurrency exchange operating in Nigeria, has announced the implementation of a 7.5% Value-Added Tax (VAT) on transaction fees starting from July 8, 2024.
This decision follows recent regulatory requirements set by the Nigerian government. The VAT will apply specifically to transaction fees, not the total transaction amount.
For example, a user buying $1,000 worth of Bitcoin with a transaction fee of $1 will incur a VAT of $0.075, resulting in a net transaction amount of $998.925.
Chimezie Chuta, Founder of Blockchain Nigeria User Group, views this move as a significant step by the Nigerian government in recognizing cryptocurrencies as an asset class.
He emphasized the importance of clear guidelines from the Federal Inland Revenue Service (FIRS) regarding the VAT applicability to digital assets.
Chuta highlighted the need for standardized regulatory frameworks to support the growing digital asset sector in Nigeria.
In response to the implementation, the FIRS praised KuCoin for proactively complying with Nigerian tax laws. The FIRS reaffirmed its stance on encouraging voluntary compliance among corporate entities operating in Nigeria.