Crypto traders in Nigeria have kicked against plans by crypto exchange, KuCoin, to start charging Nigerian users of the platform 7.5% Value Added Tax (VAT) on transaction fees starting from July 8, 2024.
Kucoin announced the plan to start charging VAT on Wednesday in an email to its Nigerian users, with the Federal Inland Revenue Service (FIRS)’s requirement.
However, this has not gone down well with many Nigerian users who felt that the government has not reckoned with crypto and should not tax it.
In the message to the users, the crypto exchange said the decision to start charging VAT was reached in line with regulatory requirements”
“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.
READ ALSO: Nigeria to charge 7.5% VAT on crypto transactions
“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.
Reacting to the announcement, some Nigerian crypto traders threatened to boycott KuCoin and look for alternative platforms that would not charge VAT. This is even as they advised the government to take the bold step of regulating the crypto industry if it wants to tax it.
Expressing his displeasure with KuCoin over the announcement, an X user identified as @MikaelCBernard, wrote:
“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.”
Another X user, @iknowWassup wrote: “What is it that the Nigerian government truly wants? You are collecting tax from something you have refused to legalize.”
For @Kickflowdown, his concern is that the government would be able to trace crypto traders through the KuCoin platform once it starts collecting VAT on behalf of the government.
“Kucoin will be obligated to share the information of Nigerian users, and the 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.
Another X user, @Crypto4bailout said: “Now that the Nigeria Govt is ready to collect 7.5% $0.075 from every trade on kuCoin. Is it now legal to withdraw money directly to Opay with the Crypto tag. Because how will I pay tax when I can’t use the tag freely when transacting locally?”