The Federal Inland Revenue Service (FIRS) has announced the commencement of the deduction of taxes at transaction points from online gaming companies, using the Sentinal National Payment Gateway.
This disclosure is contained in a public notice signed by the Executive Chairman of FIRS, Mr Muhammad Nami, which directed full compliance by the online gaming community.
The notice 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 notice by the FIRS said: “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 the government’s treasury. The deployment of the Sentinal National Payment Gateway will simplify tax compliance for companies engaged in online gaming activities.
‘Every operator offering online gaming services in Nigeria is required not later than 3rd December 2022, to connect to the Sentinal National Payment Gateway, where taxes will be deducted from the online gaming transactions and remitted directly to the relevant Government treasury.
‘’It is not mandatory for online gaming operators offering online gaming services from outside Nigeria to be incorporated in Nigeria. However, they must connect to the Sentinal National Payment Gateway for the purposes of deducting tax from gaming transactions of players in Nigeria, and remitting directly to the government.
‘’All companies engaged in online gaming activities are to take note of this notice for compliance. The FIRS expects full compliance as non-compliant operators shall be visited with sanctions in accordance with extant laws.’’
While commenting on the new initiative, Nami said that Nigeria needed to innovate and harness technology to ensure improved revenue generation from e-commerce. He 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 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. The system will also integrate with our own TaxPro Max portal.”
Also speaking on this, the Director-General of the National Lottery Regulatory Commission of Nigeria, Mr Lanre Gbajabiamila, commended the adoption of the gateway, describing it as a huge step for the taxation of the gaming industry. He said:
“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 the 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.”