Binance: Crypto Platforms Impose 7.5% VAT On Transactions

Cryptocurrency firms operating in the country have started to implement a 7.5 per 7.5-cent Value Added Tax on all transactions carried out on their platforms.

The development came a few months after the Federal Government charged Binance for reportedly failing to pay taxes.

KuCoin, a cryptocurrency exchange operating in Nigeria, announced on Wednesday that starting July 8, 2024, it would begin charging users a 7.5 per cent Value-Added Tax on transaction fees.

KuCoin disclosed this update in a statement posted on its official social media account. The new policy specifies that the 7.5 per cent VAT will be applied to the transaction fee, not the total transaction amount.

For instance, if a user buys $1,000 worth of Bitcoin (BTC) 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, resulting in a net transaction amount of $998.925.

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“We are writing to inform you of an important regulatory update that impacts our users in the Republic of Nigeria. Starting from July 8, 2024, we will begin collecting a Value-Added Tax (VAT) at a rate of 7.5 per cent on transaction fees in each trade for users whose KYC information is registered in Nigeria,” the exchange said.

KuCoin clarified that the VAT will be applied to all transaction types on its platform and is a regulatory requirement for users in Nigeria.

At the time of this report, the Federal Inland Revenue Service (FIRS) had yet to release an official statement on the development.

The Founder and Coordinator, of Blockchain Nigeria User Group, Chimezie Chuta, confirmed the development with The PUNCH.

He said the implementation of VAT on crypto transactions by KuCoin signifies the Nigerian government’s recognition of crypto as an asset class.

“I honestly see this as an acknowledgement of crypto as an asset class in Nigeria by the government,” Chuta enthused.