Cryptocurrency firms operating in Nigeria have begun implementing a 7.5% Value Added Tax (VAT) on all transactions carried out on their platforms. This development follows the Federal Government's recent action against Binance for reportedly failing to pay taxes.
KuCoin, a cryptocurrency exchange operating in Nigeria, announced on Wednesday that starting July 8, 2024, it will begin charging users a 7.5% VAT on transaction fees. The new policy specifies that the VAT will be applied to the transaction fee, not the total transaction amount.
The Founder and Coordinator of Blockchain Nigeria User Group, Chimezie Chuta, sees this as an acknowledgement of crypto as an asset class in Nigeria by the government.
However, he emphasizes the need for the Federal Inland Revenue Service (FIRS) to provide clear guidelines on the VAT applicability of digital assets.
The FIRS stated that crypto firms are only complying with Federal Government regulations on VAT. The agency's chairman, Zacch Adedeji, encourages voluntary compliance with tax laws and believes that responsible corporate bodies should comply without being prompted.
The Federal Government signaled its intention to tax cryptocurrency transactions in 2022 when the Finance Act was revised to include a 10% tax on profits from digital assets.
In recent months, cryptocurrency platforms have faced intense scrutiny following Binance's exit from Nigeria, which was accused of manipulating the naira-to-dollar exchange rate and failing to pay taxes.
