CoinDesk Report:
Wednesday saw signs of an immediate shift in cryptocurrency regulation in Nigeria as KuCoin, a cryptocurrency exchange, announced plans to levy value-added tax (VAT) on transactions starting July 8. The exchange cited a “regulatory update” in an email to its customers.
“In a message sent to Nigerian users, KuCoin stated, ‘Starting July 8, 2024, we will begin charging a 7.5% VAT on transaction fees for users registered with KYC information in Nigeria.'”
KuCoin’s African account on Twitter also shared the same information. The exchange informed Decrypt that this tax applies to “all transaction types on the KuCoin platform.”
This isn’t Nigeria’s first attempt to tax cryptocurrency trading. The Finance Act 2023, signed into law by former President Muhammadu Buhari, comprehensively reformed the nation’s revenue drive, including a 10% capital gains tax on profits from digital asset disposals starting May 1, 2023.
The Securities and Exchange Commission (SEC) clarified that “digital assets” encompass cryptocurrencies, security tokens, and utility tokens.
Experts previously told Decrypt that the ambiguous status of cryptocurrencies in Nigeria could complicate the imposition of capital gains taxes. KuCoin’s introduction of VAT fees faces similar challenges.
Emomotimi Agama, chairman of the U.S. Securities and Exchange Commission, declined to comment on the new tax. However, taxing cryptocurrency transactions could represent early official recognition of the industry in Africa’s most populous nation.
The introduction of VAT on cryptocurrency transactions has raised questions about broader impacts on Nigeria’s emerging cryptocurrency industry. Just last week, the U.S. Securities and Exchange Commission estimated the industry’s value at $400 million.
As one of Africa’s largest cryptocurrency markets, regulatory decisions in Nigeria could affect investor confidence and market dynamics.
Last month, the SEC mandated that cryptocurrency exchanges and digital asset dealers re-register their businesses within 30 days or face enforcement actions. The U.S. Securities and Exchange Commission indicated this was part of its plan to regulate digital asset trading.
Edited by Stacey Elliott.
