KuCoin, a cryptocurrency exchange, has announced that it will start collecting a 7.5 per cent Value-Added Tax on transaction fees for users in Nigeria, effective July 8, 2024.
The company made this disclosure in a statement posted on its X account on Wednesday.
“We are writing to inform you of an important regulatory update that impacts our users from Nigeria,” KuCoin said.
“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 disclosed that the VAT will be charged on the transaction fees, which range from 0.1% to 0.05%, and not on the total transaction amount.
This means that if a user buys $1,000 worth of Bitcoin with a 0.1 per cent fee rate, the transaction fee would be $1.
The VAT would be 7.5 per cent of the fee, which is $0.075. The net amount for the transaction would be $998.925.
KuCoin, however, urged users to 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 Finance Act 2023 (FA2023, or the Act), which former President Muhammadu Buhari signed into law on May 28, 2023, introduces significant changes to the existing tax laws and regulatory framework, aiming to foster economic growth, enhance fiscal stability and promote sustainable development.
The FA2023 seeks to provide support for the funding of the 2023 Budget of Fiscal Consolidation and Transition.
The Act aims to strike a balance between fiscal stability and economic growth while addressing emerging challenges in the digital economy, ensuring sustainable economic growth and improving the tax administration.
The Act introduces changes to the Capital Gains Tax (CGT) Act, Companies Income Tax (CIT) Act, Personal Income Tax (PIT) Act, Customs and Excise Tariff Etc. (Consolidation) Act (CETA), Value Added Tax (VAT) Act, Petroleum Profits Tax (PPT) Act, Stamp Duties Act (SDA), Corrupt Practices and Other Related Offences (CPORO) Act, Tertiary Education Trust Fund (Establishment) Act, Public Procurement Act (PPA) and the Ministry of Finance (Incorporated) {MoFI} Act.
The commencement date of these amendments is now September 1 2023, in line with the Finance Act (Effective Date Variation) Order, 2023, which was signed by His Excellency, President Bola Ahmed Tinubu, on July 6, 2023.
The Act also made slight modifications to its predecessors, the Finance Acts 2019, 2020 and 2021, to clarify some of the changes introduced by these Acts and align them more with the government’s fiscal plans and current economic realities.
