Crypto traders in Nigeria are protesting KuCoin's decision to charge a 7.5% Value Added Tax (VAT) on transaction fees starting July 8, 2024. The announcement was made via email to Nigerian users, citing regulatory requirements from the Federal Inland Revenue Service (FIRS).
This move comes amid a broader government crackdown on crypto exchanges and transactions in Nigeria, which recently forced Binance to cease NGN/USD P2P trading on its platform. Many Nigerian users are dissatisfied, arguing that the government should not tax an industry it does not officially recognize.
In its message, KuCoin explained that the VAT would apply only to transaction fees, not the transaction amount, and would affect all transaction types on the platform.
"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 KuCoin platform," the exchange stated.
User Reactions
Some Nigerian crypto traders have threatened to boycott KuCoin in response to the VAT charge. An X user, @MikaelCBernard, urged Nigerians to avoid using KuCoin until the VAT is removed, criticizing the government for taxing an unregulated industry. "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," he wrote.
https://x.com/MikaelCBernard/status/1808492406783828095
Another user, @iknowWassup, questioned the government's inconsistent stance on crypto legalization and taxation. "What is it that the Nigerian government truly wants? You are collecting tax from something you have refused to legalize".
https://x.com/iknowWassup/status/1808769967719870558
There are also concerns about privacy and security. User @Kickflowdown expressed worry that KuCoin might be required to share user information with the government, potentially leading to account closures and other repercussions for Nigerian 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," he wrote .
https://x.com/Kickflowdown/status/1808770231407390894
Nigeria’s National Security Adviser recently classified crypto trading as a national security issue. Consequently, the Central Bank of Nigeria (CBN) ordered five fintech companies—OPay, Palmpay, Moniepoint, Kuda, and Paga—to halt new customer onboarding and prohibit transactions involving cryptocurrency. These fintechs must report accounts trading in crypto to the NSA via the CBN.
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