The leading cryptocurrency exchange, KuCoin, has implemented a 7.5% transaction fee tax on all trades executed on the platform for its Nigerian users.
According to an official announcement, KuCoin will start collecting a value-added tax (VAT) of 7.5% on transaction fees from July 8 to align with recent regulatory developments. This update affects all users with their Know Your Customer information registered in Nigeria.
KuCoin to Tax Nigerian Users
To avoid misunderstandings about the latest development, KuCoin clarified that the VAT applies to the transaction fees in each trade, not the transaction amount. For instance, a 1,000 Tether (USDT) transaction would incur a 1 USDT fee and a 0.075 USDT tax, which represents 7.5% of the fee. Hence, the net amount for the transaction would be 998.925 USDT.
KuCoin’s announcement comes roughly four months after the Nigerian government filed tax evasion charges against Binance, the world’s largest crypto exchange. In March, the Federal Inland Revenue Service (FIRS) of Nigeria dragged Binance to court over four counts of tax evasion, money laundering, and terrorist financing allegations.
Per the FIRS lawsuit, Binance failed to deduct VATs from Nigerian crypto traders on its platform, failed to register and pay taxes incurred from offering its services, aided and abetted users in neglecting their taxes, and refrained from issuing VAT invoices to users to ensure appropriate tax payments.
Meanwhile, KuCoin’s latest update raises speculation on the future fate of Nigerian crypto users. The exchange and Binance have already paused peer-to-peer services for the Nigerian naira, and other exchanges are bound to follow suit in activating taxes for all trades.