FIRS partners UK-based firm to begin deducting taxes from online gaming operators

Eberechukwu Etike
Operators are required to adopt an integration feature that will automate the tax deductions before December 31st…
FIRS sets plans to start deducting tax from online gaming operators in Nigeria
FIRS sets plans to start deducting tax from online gaming operators in Nigeria

Nigeria’s tax agency, Federal Inland Revenue Service (FIRS) appears to be looking for new ways to address the country’s revenue shortfall that President Muhammadu Buhari identified as Nigeria’s biggest fiscal threat and online gaming seems to be the new catch.

The tax agency has recently collaborated with a UK-based financial technology firm, e-Technologies Global Ltd to commence the direct deduction and collection of taxes from online gaming companies operating in Nigeria using a private company, the Sentinal National Payment Gateway and Electronic Solution.

FIRS executive chairman, Muhammad Nami told Bloomberg in an emailed statement that the platform will “not only collect tax revenues at source but also provide us with tax-reporting and monitoring tools in real-time,”

Read Also: Here are the similarities between P2E Gaming and Ponzi Schemes

Online gaming tax: How it will work

Sentinal National Payment Gateway and Electronic Solution is a platform that allows financial institutions and governments to easily apply taxes and fees, monitor and control all e-commerce service activities and immediately remit the tax deducted to the government’s treasury.

The Federal Inland Revenue Service of Nigeria appears to be particularly interested in the platform as it aims to help the government recover the ‘millions’ in this potential revenue stream.

According to FIRS, the platform will help to automate the administration of taxes on online gaming, The goal of the platform is not only limited to only collecting tax revenues, but also provide the tax agency with tax-reporting and monitoring tools in real-time, simplifying tax compliance for companies.

This new technology is mandatory for all online gaming operators operating in Nigeria. They are required to adopt a backend integration feature that will automate the tax deductions before the end of this year, 31st of December, 2022.

FIRS sets plans to start deducting tax from online gaming operators in Nigeria
An online game betting shop in Lagos, Nigeria

For online gaming operators offering services from outside Nigeria, existing law requires them to connect to the Sentinal National Payment Gateway in order to help the tax agency deduct tax from the gaming transactions of players in Nigeria, although that has not yet been made mandatory.

Read Also: Mobile Gaming in Nigeria and why Telcos Like MTN Are Looking to Take Advantage

The growth of online gaming in Nigeria

The gaming industry in Nigeria has grown significantly over the past few years. This could be attributed to either the country’s growing tech-savvy population or the current economic climate, which has caused people to look for alternative online income streams like gaming and sports betting.

The value of the social online gaming business in Nigeria is surging. According to Statista. It is predicted to grow to about $128 million annually in 2023. FIRS is evidently working to understand the potential of the market and establish guidelines for a correct taxation regime.

On a positive note, it is significant that Nigeria is actively leveraging technology in this context, to increase revenue generation and improve accountability.


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