Crypto traders in Nigeria have spoken out against KuCoin’s plans to charge Nigerian users of the site 7.5% Value Added Tax (VAT) on transaction fees beginning July 8, 2024.
Kucoin stated in an email to its Nigerian users on Wednesday that it will begin charging VAT in line with the Federal Inland Revenue Service requirements.
However, this has not gone down well with many Nigerian users, who believe that the government has not considered cryptocurrency and should not tax it.
The VAT charge by KuCoin comes amid the Nigerian government’s crackdown on crypto exchanges and crypto-related activities, which resulted in Binance’s exit.
The government’s decision has also caused Binance and KuCoin to suspend NGN/USD P2P trading on their platforms.
In the message to the users, the crypto exchange said the decision to start charging VAT was reached in line with regulatory requirements.
“We are writing to inform you of an important regulatory update that impacts our users from the Republic of Nigeria. Starting on 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 KuCoin platform,” the exchange stated.
Nigerians took to social media to react to the announcement.
Some Nigerian cryptocurrency dealers have threatened to boycott KuCoin and seek alternative platforms that do not impose VAT while urging the government to take the brave step of regulating the cryptocurrency business if it wishes to tax it.
An X user identifying as @MikaelCBernard expressed his displeasure with KuCoin regarding the announcement, writing “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 X user, @iknowWassup wrote:
“What is it that the Nigerian government truly wants? You are collecting tax from something you have refused to legalize.”
Meanwhile @Kickflowdown, voiced is concerned stating that the government may be able to trace crypto traders through the KuCoin platform once it starts collecting VAT on behalf of the government.
“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,” he wrote.
Nigeria’s National Security Adviser recently designated cryptocurrency trading as a national security threat.
This led to the Central Bank of Nigeria (CBN) ordering five fintech companies including OPay, Palmpay, Moniepoint, Kuda, and Paga to stop onboarding new customers.
In response to the regulatory move, all fintechs have indicated that they will not allow cryptocurrencies or any other virtual currency transactions on their systems.
