Nigeria’s tax agency, Federal Inland Revenue Service (FIRS) has announced that it has commenced the direct deduction and collection of taxes at transaction points from online gaming companies using the Sentinal National Payment Gateway and Electronic Solution.
This was made known in a statement by Johannes Oluwatobi Wojuola, the Special Assistant on Media & Communication to the Executive Chairman of the FIRS and made available to journalists on Wednesday.
According to the statement, the Executive Chairman of the Service, Muhammad Nami, while directing full compliance by the online gaming community, explained that the Sentinal National Payment Gateway is 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 notice read, “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 Service further noted that all operators offering online gaming services in Nigeria, not later than the 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 also 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 deducting tax from the gaming transactions of players in Nigeria, and remitting same directly to the government purse.
Also commenting on this approach to tax collection at the point of transaction, Nami stated that Nigeria needed to innovate and harness technology for improved revenue generation from e-commerce as well as for accountability.
Nami said, “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.”
Commenting on the development at a meeting with the tax authority head, the Director General of the National Lottery Regulatory Commission of Nigeria, Lanre Gbajabiamila, described the adoption of the new innovation as a “huge step” for taxation of the gaming industry.
The statement quoted Gbajabiamila as saying that “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,” he added.