Cryptocurrency and Tax Battle In Nigeria

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Since the beginning of 2017 till date the Nigerian government through its agency in charge of monetary policy known as the Central Bank of Nigeria has been climbing down on cryptocurrency transactions asking financial institutions such as banks and other fintech companies to desist from facilitating crypto-related transactions.

A lot has been going on in the country and the purpose of all the saga concerning crypto trading in Nigeria is to make the industry safer for Nigerians and to impose taxes on crypto trading since the crypto industry is now seen as the leading industry in the world. Believe it or not, the government knows that crypto is the future of finance which is why governments across the world have been doing everything possible to have control of the industry the only way they can do this is to impose taxes on crypto trading which would be deducted from user, traders and investors transaction by an exchange.

Coming to this crypto companies operating in Nigeria have been instructed by the Nigeria government to start paying what is known as the value-added tax on all crypto transactions which came in a few months ago after the government of Nigeria filed charges against Binance that led to the desist of p2p (peer to peer) trade in Nigeria.

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The government mandated that all crypto firms operating in Nigeria should desist from offering peer-to-peer trade to Nigerians so Naira could be stabilized against the US. Dollar NAIRA/USD, NAIRA/USDT, which even resulted in Kucoin and other exchanges stopping Nigerians from trading P2P from their platform.

After some months of the ban, dialogue (negotiation) between crypto firms operating in Nigeria and the government of Nigeria, has been going on and the government is more interested in collecting a 7.5 percent value-added tax on every cryptocurrency transaction. To this, Kucoin issued a reminder notice and circulated the notice as a reminder to all Nigerian users who have done KYC. Below is a screenshot of the message that I and every other Nigerian received from Kucoin.

_{screenshot from my email}

Kucoin a crypto firm operating in the jurisdiction of Nigeria made the announcement on its official X account and still circulated the information to its users which you can see from the screenshot image shared above.

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What does the 7.5 percent value-added tax (tax) mean

Based on the illustrations that were given by Kucoin, it simply means that if you are Nigerian and you are using Kucoin to facilitate crypto transactions you will be charged 7.5% for every of your transaction. For example, let's say you have $1,000 and you want to buy a BTC that is worth $1,000 with the 0.1 % fee rate, which is the official fee rate of Kucoin, the transaction fee would be worth $1. The value-added tax (VAT) that will be paid to the government would then be 7.5 of the fee, which is $0.075, and your net transaction will then be worth $998.925.

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As a crypto enthusiast what is your take on this

• Do you think this implementation of Value Added Tax on all crypto transactions by the Kucoin exchange is a sign that the Nigerian government has recognized cryptocurrency as an asset in the country?

• Do you think with the implementation of VAT by Kucoin Nigeria will drop below or become the leading country that deals with crypto assets?

Disclaimer

_{This is not investment advice, but a write-up that is written based on the current happenings in the Nigeria crypto industry the purpose of this post is to educate you about the latest crypto gist in Nigeria.}

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