Federal Inland Revenue Service (FIRS) has commenced the deduction of taxes at transaction points from online betting and gaming operators, according to Muhammad Nami, chairman, FIRS.
Nami, has also directed online gaming community to fully comply, using the Sentinel National Payment Gateway.
He said: “The FIRS is automating the administration of tax on online gaming using Sentinel National Payment Gateway and Electronic Solution,” the statement reads.
”Sentinel National Payment Gateway is a transaction processing system that enables Integrated Payment Service Providers to deduct taxes at transaction points and remit the tax deducted directly to the government’s treasury.
“The deployment of Sentinel National Payment Gateway will simplify tax compliance for companies engaged in online gaming activities.”
The FIRS said all operators offering online gaming services, not later than December 31, 2022, are required to connect to the Sentinel National Payment Gateway, deduct tax from online gaming transactions — and remit directly to the relevant government treasury.
”Though it is not mandatory for online gaming operators offering online gaming services from outside Nigeria to be incorporated in Nigeria, they are compelled by extant tax laws to connect to the Sentinel National Payment Gateway to dedicate tax from the gaming transactions of players in Nigeria, and remitting same directly to the government purse,” the agency said.
Commenting on the approach of tax collection at the point of transaction, the FIRS chairman said the country needs to innovate and harness technology for improved revenue generation.
“The world is entering a challenging time where there is a strong obligation on governments to increase tax revenue as a percentage of GDP so as to provide much-needed funding for local infrastructure and public services. Nigeria needs to innovate and harness technology to ensure that online transactions are taxed and accounted for.
“We have been very impressed with the Sentinel platform which allows us to not only collect tax revenues at source but also provides us with tax reporting and monitoring tools in real-time. The system will also integrate with our own TaxPro Max portal,” Nami said.
Lanre Gbajabiamila, director-general, National Lottery Regulatory Commission of Nigeria, commended the adoption of the innovation, describing it as a “huge step” for taxation in the gaming industry.
“Online gaming continues to grow rapidly in Nigeria, particularly on mobile, and the adoption of E-technologies’ Sentinel National Payment Gateway is a huge step for us to allow us to capture gaming duty at source,” he said.
”We are welcoming all responsible offshore gaming operators to apply for a remote operator permit as long as they pass all the relevant criteria including full AML screening and responsible gaming practices.
“We are proud to be the first country to adopt the Sentinel System and we believe it will bring a real national benefit to Nigeria.”
David Kicks, chief executive officer, E-Technologies Global Limited, proprietors of the Sentinel National Payment Gateway, David Kicks, expressed excitement over the adoption of the system by the FIRS.
“Governments in rapidly developing nations are struggling to keep pace with the evolution of eCommerce and the ascent of mobile transactions,” Kicks said.
”We are thrilled that the Nigerian Government has made the decision to integrate our Sentinel System, which empowers them to streamline online taxation. By understanding better how the payments ecosystem behaves and evolves, we can drive a paradigm shift towards a point of consumption tax methodology,” he said.