Starting July 8, 2024, cryptocurrency traders in Nigeria will be subject to a 7.5 percent value-added tax (VAT) on transaction fees. The cryptocurrency platform KuCoin announced this change in an email to its users, citing a regulatory update in Nigeria as the reason for the new tax.

KuCoin explained that the VAT will apply only to transaction fees, not the total transaction amount.

For instance, if a user buys For instance, if a user buys $1,000 worth of bitcoin with a 0.1 percent fee rate, the transaction fee would be $1.,000 worth of bitcoin with a 0.1 percent fee rate, the transaction fee would be For instance, if a user buys $1,000 worth of bitcoin with a 0.1 percent fee rate, the transaction fee would be $1.

The VAT would be 7.5 percent of the fee, amounting to $0.075, making the net amount for the transaction $998.925.

The business mentioned: “We are writing to notify you of an important regulative update that affects our users from Nigeria. Beginning with July 8, 2024, we will start gathering a Value-Added Tax (BARREL) at a rate of 7.5 percent on deal fees in each trade for users whose KYC information is registered in Nigeria.

The VAT will cover all transaction types on the KuCoin platform, impacting users who trade cryptocurrencies and other digital assets. This move follows the Nigerian government’s previous hints at taxing digital assets and cryptocurrencies.

In the 2023 Finance Act, a 10 percent tax on profits from digital assets was introduced, though it has not yet been enforced. In addition, the Securities and Exchange Commission (SEC) of Nigeria announced plans in May to delist the naira from all peer-to-peer (P2P) platforms to avoid manipulation in the cryptocurrency market.