The Federal Inland Revenue Service (FIRS) says it has commenced the deduction of taxes at transaction points from online gaming transactions using the Sentinal National Payment Gateway and Electronic Solution.
This was revealed in a statement signed by Muhammad Nami, Executive Chairman, FIRS, who 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 the tax deducted to the government’s treasury.
“The FIRS is automating the administration of tax on online gaming using Sentinal National Payment Gateway and Electronic Solution which will simplify tax compliance for companies engaged in online gaming activities,” it 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 the same directly to the relevant government’s treasury.
The notice added 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.
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Nami, stated that the country needed to innovate and harness technology for improved revenue generation from e-commerce as well as for accountability, adding that the Sentinal platform which eases remittance also provides tax reporting and monitoring tools in real time and will be integrated with the indigenous TaxPro Max portal.
“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,” he said.
Lanre Gbajabiamila, Director General of the National Lottery Regulatory Commission of Nigeria, commended the adoption of this innovation, describing it as a huge step for taxation of the gaming industry which has continued to grow rapidly in Nigeria.
“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,” Gbajabiamila noted.
David Kicks, CEO, E-Technologies Global Limited, who are the proprietors of the Sentinal National Payment Gateway expressed excitement over the adoption of the system by the Service, noting that 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.
