By Emmanuel Ogbodo
Crypto traders in Nigeria are expressing strong dissatisfaction with KuCoin’s recent decision to impose a 7.5% Value Added Tax (VAT) on transaction fees for Nigerian users, starting July 8, 2024. KuCoin announced this new policy in an email to its Nigerian users, citing a requirement from the Federal Inland Revenue Service (FIRS).
Many Nigerian users are unhappy with this decision, arguing that the government has not formally acknowledged the legitimacy of cryptocurrency and therefore should not tax it. This announcement comes amid a period of increased government scrutiny on crypto exchanges in Nigeria, which previously led Binance to exit the market and both Binance and KuCoin to halt NGN/USD peer-to-peer trading.
In its communication to users, KuCoin explained that the VAT would be applied to transaction fees, not the transaction amount, and would affect all types of transactions on their platform. The email stated:
“We are writing to inform you of an important regulatory update that impacts our users from the Republic of Nigeria. Starting from July 8th, 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. Please note that the VAT will be applied to the transaction fees in each trade, not the transaction amount, and covers all transaction types on the KuCoin platform.”
In response, some Nigerian crypto traders have threatened to boycott KuCoin and seek alternative platforms that do not impose VAT. They also suggested that the government should regulate the crypto industry if it intends to tax it.
An X user, @MikaelCBernard, voiced his frustration, saying:
“Dear Nigerians, boycott KuCoin until they remove that stupid VAT. If the government wants to tax crypto, then they should legalize it. You cannot be blocking people’s bank accounts, using NSA to kidnap crypto traders, and demanding tax. It just does not make sense. Boycott KuCoin wow.”
Another user, @iknowWassup, questioned the government’s motives:
“What is it that the Nigerian government truly wants? You are collecting tax from something you have refused to legalize.”
@Kickflowdown expressed concerns about privacy, suggesting that the government could use KuCoin to track crypto traders:
“KuCoin will be obligated to share the information of Nigerian users, government will use that information to block Naija accounts. Any Nigerian living in Nigeria still holding a KuCoin account is risking jail and bank account closure. They can easily track p2p transactions.”
Similarly, @Crypto4bailout commented on the implications of the tax:
“Now that the Nigeria Govt is ready to collect 7.5% $0.075 from every trade on KuCoin. Is it now legal to withdraw money directly to Opay with the Crypto tag? Because how will I pay tax when I can’t use the tag freely when transacting locally?”
Lastly, @eminiAlafe pointed out the contradiction in the government’s stance on crypto:
“It’s just very absurd that a tax is being introduced when they had already pronounced crypto as illegal. Tax here and there yet no positive impact.”
