FIRS commences direct collection of taxes from online gaming operators

The Federal Inland Revenue Service (FIRS) has commenced the deduction of taxes at transaction points from online gaming operators, using the Sentinal National Payment Gateway and Electronic Solution.

In a Public Notice signed by its Executive Chairman, Muhammad Nami, the Service while directing full compliance by the online gaming community, explained that the Sentinal National Payment Gateway was a transaction processing system that enables Integrated Payment Services Providers to deduct taxes at the points of transaction and immediately remit same to the government’s treasury.

“The FIRS is automating the administration of tax on online gaming using Sentinal National Payment Gateway and Electronic Solution.

“Sentinal 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 government’s treasury.

“The deployment of Sentinal National Payment Gateway will simplify tax compliance for companies engaged in online gaming activities,” the notice read.

The FIRS also noted that all operators offering online gaming services in Nigeria, not later than the 31st of December 2022, were required to connect to the Sentinal National Payment Gateway, deduct tax from online gaming transactions and remit same directly to the relevant government’s treasury.

The Notice stated that though it was 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 Sentinal National Payment Gateway for the purposes of dedicating tax from the gaming transactions of players in Nigeria, and remitting same directly to the government purse.

Commenting on this approach to tax collection at the point of transaction, Nami stated that the country needed to innovate and harness technology for improved revenue generation from e-commerce as well as for accountability.

In his comments at a meeting with the tax authority head, the Director General of the National Lottery Regulatory Commission of Nigeria, Mr. Lanre Gbajabiamila commended the adoption of the innovation, describing it as a huge step for taxation of the gaming industry.

“Online gaming continues to grow rapidly in Nigeria, particularly on mobile, and the adoption of E-technologies’ Sentinal National Payment Gateway is a huge step for us to allow us to capture gaming duty at source.

“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 Sentinal System and we believe it will bring a real national benefit to Nigeria,” Mr. Gbajabiamila noted.

David Kicks, the CEO of the E-Technologies Global Limited, the proprietors of the Sentinal National Payment Gateway expressed excitement over the adoption of the system by the Service.

“Governments in rapidly developing nations are struggling to keep pace with the evolution of eCommerce and the ascent of mobile transactions.

“We are thrilled that the Nigerian government has made the decision to integrate our Sentinal 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