Signs of an immediate regulatory shift for cryptocurrency in Nigeria emerged on Wednesday as crypto exchange KuCoin announced it would begin charging a value-added tax on transactions beginning July 8. The exchange cited a “regulatory update” in the email it sent to customers.
“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,” KuCoin said in an email sent to its Nigerian users.
KuCoin’s Africa account on Twitter shared the same information. The tax applies to “all transaction types on KuCoin platform,” the exchange told Decrypt.
This is not the first time Nigeria has attempted to levy a tax on cryptocurrency transactions.
The 2023 Finance Act, signed into law by former Nigerian president Muhammadu Buhari, introduced sweeping changes to the nation’s revenue drive. It included a 10% capital gains tax on profits made in the disposal of digital assets from May 1, 2023.
The country’s Security and Exchange Commission (SEC) clarified that “digital assets” include cryptocurrencies, security tokens, and non-security tokens.
Experts told Decrypt last year that a lack of clarity over cryptocurrency’s status in Nigeria could make it challenging to collect the capital gains tax. The new VAT fee at KuCoin has been met with similar sentiments.
SEC boss Emomotimi Agama told Decrypt that the agency does not yet have a comment on the new tax. However, taxing crypto transactions may be an early official recognition of the crypto sector in Africa’s most populous country.
The introduction of VAT on crypto transactions raises questions about the broader implications for Nigeria’s burgeoning crypto industry. Just last week, the SEC estimated that the industry there is valued at $400 million.
As one of Africa’s largest markets for digital currencies, Nigeria’s regulatory decisions will likely impact investor confidence and market dynamics.
Last month, the country’s Security and Exchange Commission asked crypto exchanges and digital assets traders 30 days to re-register their businesses—or risk facing enforcement actions. SEC said the move was part of its plan to regulate digital assets trading.
Edited by Stacy Elliott.
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