The Federal Internal Revenue Service (FIRS) has announced that it has begun withholding tax at transaction points for online gambling transactions using the Sentinal National Payment Gateway and electronic solutions.
In a public notice signed by Executive Chairman Muhammad Nami, the service mandates full compliance by the online gaming community, while Sentinal National Payment Gateway requires integrated payment service providers to remove taxes from transactions. It states that it is a transaction processing system that allows for deductions. Earn points and immediately transfer deducted taxes to the Treasury.
“FIRS uses Sentinal National Payment Gateway and Electronic Solution to automate online gambling tax administration.
“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 31, 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 deducting tax from the gaming transactions of players in Nigeria, and remitting same directly to the government purse.
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Executive Chairman of the FIRS, Muhammad Nami, while commenting on this approach to tax collection at the point of transaction, stated that the country needs to innovate and harness technology for improved revenue generation from e-commerce as well as for accountability.
“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 Sentinal 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,” Nami stated, “The system will also integrate with our own TaxPro Max portal.”
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 this 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,” Gbajabiamila noted.
The CEO of the E-Technologies Global Limited, the proprietors of the Sentinal National Payment Gateway, David Kicks, 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.
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