FEDERAL GOVERNMENT IMPOSES 7.5% VAT ON CRYPTOCURRENCY TRANSACTIONS
e Federal Government has announced the imposition of a 7.5% Value Added Tax (VAT) on cryptocurrency transactions. This new development was revealed after KuCoin, a cryptocurrency exchange, stated it would begin collecting the transaction fees for users in Nigeria.
In a statement released on July 3, KuCoin announced that the VAT deduction would start on July 8. The 7.5% VAT will be applied to the transaction fee, not the total transaction amount. For instance, if a user buys $1,000 worth of bitcoin with a 0.1% fee rate, the transaction fee would be $1. The VAT on the fee would be 7.5%, amounting to $0.075, making the net transaction amount $998.925.
“We are writing to inform you of an important regulatory update that impacts our users from 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. The 7.5% is only charged on the 0.1%/0.05% transaction fee and not your total amount which will be remitted.
“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 the KuCoin platform,” the crypto exchange stated.
In 2022, former Minister of Finance, Budget, and National Planning, Zainab Ahmed, had hinted at the government’s plans to tax cryptocurrencies and other digital assets. The 2023 Finance Act subsequently imposed a 10% tax on profits from digital assets, including cryptocurrencies, though this particular provision of the act has not yet been enforced.
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