The Executive Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, has disclosed the agency’s plans to charge Value Added Tax (VAT) on gaming activities, as well as automate VAT collection from lottery operators in Nigeria. Are value-added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain.
He disclosed this during a stakeholders’ meeting organised in conjunction with the National Lottery Regulatory Commission (NLRC) and lottery and gaming operators. According to him, the automation will help lottery players and bettors to easily pay VAT on each transaction.
How VAT collection will be deployed in the gaming/lottery sector
The plan will see users of the services provided by the betting industry pay five percent VAT on every transaction made. The agency also aims to automate VAT collection in the gaming and lottery industry.
Stakeholders kick against the new plan
Gaming and lottery industry stakeholders have unanimously expressed displeasure over FIRS’ decision to charge VAT on games and lottery activities. They are also not pleased with the plan to automate the VAT charges.
According to the stakeholders, the additional 5 percent charge for VAT could discourage punters from using their services.
Speaking on behalf of lottery and gaming operators, Akin Alabi, the Founder of Nairabet, said the intended automation is poised to kill the business.
Alabi added that the potential reduction in hoped-for winnings, especially on low-odds bets, will drive customers from regulated operators into the hands of unregulated ones. He also argued that the FIRS should have consulted operators before taking the decision to impose 5 percent VAT and automating the collection process.
Speaking on the development Digital Economy lawyer Adavize Alao praised the FIRS administration for seeking new ways of raising revenue for the government. The lawyer added that while the aim of the collection was good, gaming and gambling are not value added services and should therefore be exempt from VAT. He also stated that the FIRS administration ought to widen the tax met rather than collect VAT on gambling charges.