KuCoin, a prominent global cryptocurrency exchange, has declared that starting on July 8, the platform will commence collecting a 7.5% value-added tax (VAT) on transaction fees for users in Nigeria who have registered their KYC (Know Your Customer) information.
This new announcement means that Nigerian users will experience a slight increase in the fees associated with their trades on KuCoin. It’s important to note that the 7.5% VAT is only applied to the transaction fee, not the total transaction amount, and will cover all transaction types on the KuCoin platform.
However, KuCoin is currently banned by the Nigerian government, raising concerns about the VAT policy among Nigerian crypto stakeholders. Lucky Uwakwe, President of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), has expressed doubts and worries about potential fraud and transparency issues with the new levy.
Uwakwe has raised questions about how the Nigerian government will verify the number of users, ensure accurate reporting of trade activities, and confirm that the collected VAT is properly remitted. Additionally, there are concerns about how KuCoin will pay the VAT, given the Central Bank of Nigeria (CBN)’s restrictions on converting crypto to fiat.
The blockchain group leader has also speculated whether the CBN would allow banks to facilitate crypto trades and if the VAT would apply to Nigerians living and accessing KuCoin abroad.
On the other hand, local crypto analyst Rume Ophi sees the VAT levy as a positive development, indicating the government’s recognition of digital assets as a financial instrument. Ophi believes that this could pave the way for the implementation of crypto regulations and the granting of licenses to industry players.
He emphasized that the government missed an opportunity by continuing the 2021 CBN ban, causing industry players to migrate offshore instead of building the young industry in Nigeria.
Cointelegraph has reached out to KuCoin for more information about the levy but has not received feedback at the time of publication.