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.
FIRS, in a public notice signed by its Executive Chairman, Muhammad Nami, said 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.
“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 notice read.
The FIRS noted that all operators offering online gaming services in Nigeria, not later than 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.”
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It stated that though it was not mandatory for online gaming operators offering online gaming services from outside Nigeria to be incorporated in the country, they were 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.
Speaking on the approach to tax collection at the point of transaction, Nami stated that the country needed 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,” he said, adding that the system will also integrate with FIRs TaxPro Max portal.
Speaking at a meeting with the tax authority head, the Director General of the National Lottery Regulatory Commission of Nigeria, Lanre Gbajabiamila, described the innovation as a “huge step” for taxation of the gaming industry.
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