09 Apr FIRS and NLRC Collaborates To Automate VAT Collection in Lottery & Gaming Sector

By Victoria Nwabundo, Aisha Tanko and Garos Gyang

The National Lottery Regulatory Commission and the Federal Inland Revenue Service have commenced the automation process of collecting value added tax (VAT) in the Lottery and gaming sector.

In a stakeholder’s forum held recently in Lagos, the Executive Chairman of the FIRS, Dr. Tunde Fowler said that the automation is aimed at improving transparency, accountability and convenience in the collection of VAT and to ensure everybody plays their part, adding that the process is a lawful way of generating more revenue for the Nigeria government. He said that this process is not peculiar to the Lottery and gaming industry alone but cuts across some other sectors where it recorded huge successes.

He stated that the intent of the exercise was not to cause damage in the gaming industry but rather improve standard of living of the general public as the government utilizes such revenue to provide basic social amenities for the Nigerian Populace.

Speaking at the forum, the DG NLRC, Mr. Lanre Gbajabiamila reckoned that taxes are primary tools employed by government to provide money for essential public services and social intervention program. He noted that the importance of strict adherence to tax collection policies cannot be over emphasized in view of Nigeria’s present economic challenges, and added that VAT is essentially a consumption tax payable by the consumer.

According to the DG, the gaming industry’s product and services are generally offered through agents who are commonly in direct contact with the players and these agents seldom collect VAT from players resulting in revenue loss to the government. He noted that the players are unaware that their consumption of product and service in the gaming sector is taxable under the law. He pledged the Commission’s willingness to comply with the law.

However, Mr. Gbajabiamila recognized the fact that the process will pose some discomfort in the sector but assured lottery stakeholders that NLRC will not sit down and watch the lotto businesses in the country to pack up. He promised that the Commission would work together with the technical partner and software providers of the automation process to ensure the process succeeds.

The Chairman of Zurich Technology, technical partner and software provider for the automation process in the lottery sector, Mr. Adeniyi Oyemade while assuring Lottery operators that his firm has developed a software that will make the payment process seamless, efficient and transparent stated that the automation software will provide a transparent system that will allow the FIRS, the NLRC and Zurich Tech. to have access to the payment portal and monitor all transactions.

In the course of the presentation, Mr. Oyemade said that the VAT component will be added to the original cost of betting which the consumer will pay for and that the software automatically calculates the VAT component of all transactions within a 21-day period and gives the bill to the lottery operator who in turn will pay to the FIRS.

Speaking on behalf of lottery and gaming operators, Mr. Akin Alabi founder of Naira Bet decried the mode of charges on the VAT. He called on FIRS to device another means of going about such charges as this method according to him would either drive away customers from operators platform or discourage them from playing lottery.

He advised them to create another method of collecting VAT rather than from the top level which is on every stake. This, he said depicts lack of understanding of how the industry works and that telling players to pay extra on every stake is almost impossible. According to Mr. Alabi, this means that customers would abandon lottery platforms that operate legally as a result of not having benefits in search of other illegal lottery companies and foreign companies where they can place their bet and this will ruin the sports betting business.

Alabi maintained that FIRS should have consulted operators before taking the decision to automate the collection of VAT in the lottery and gaming industry.