FIRS Commences Automation of Taxes on Online Gaming Activities in Nigeria


By a Public Notice dated October 2022 and captioned “Real Time Direct Collection of Taxes from Online Gaming Transactions”, the Federal Inland Revenue Service (FIRS) notified the general public of the commencement of automation of the administration of tax on online gaming activities in Nigeria, with the objective of such automation being to simplify tax compliance for companies engaged in online gaming activities through deduction of taxes at transaction points and direct remittance to the Government’s Treasury.

It was announced in the Public Notice that the automation will be executed using the Sentinal Payment Gateway and Electronic Solutions (Sentinal Gateway). Consequently, the FIRS mandates all operators providing online gaming services in Nigeria to connect to Sentinal Gateway on or before 31 December 2022 as sanctions will be meted out on non-compliant companies. Likewise, foreign companies offering online gaming services in Nigeria are required to connect to Sentinal Gateway for the purpose of collection and remittance of taxes.

Our Comments:

There exists a multiplicity of gaming legislation at both federal and state levels yet, there remains an unresolved controversy as to whether it is the state or federal government that has the power to collect gaming taxes. It is, however, commonly argued that gaming, being an item found neither on the Exclusive nor Concurrent Legislative Lists, is a residual matter over which a State House of Assembly has powers in accordance with Section 4(7)(a)&(b) of the Constitution of the Federal Republic of Nigeria, 1999, as amended (CFRN).

This argument is strengthened by the decision of the Court of Appeal in Micheal Umo Edet V Joseph Chagoon & Anor.[1], wherein the Court held that “… Pool Betting being in the Residual List of Legislation, must necessarily be regulated by a law of the House of Assembly and not that of the National Assembly …”. Despite of the foregoing, the Federal Government has continuously engaged in a tussle with the State Governments over the collection of gaming taxes.

Nonetheless, to achieve efficient execution of the tax automation process, such that leakages are blocked and transparency and accountability are promoted, an Application Program Interface that would allow the FIRS monitor real-time the activities of qualifying companies is recommended. This would eliminate the potential leakages that may result from the non-disclosure of some transactions entered into by gaming operators.

Relatedly, it is quite perplexing that the Government has chosen to execute the automation of the administration of online gaming activities by utilizing the Sentinal Gateway, a creation of a foreign Fintech company (e-Technologies Global Limited), despite the abundance in Nigeria of indigenous fintech companies with a robust portfolio showing competence to provide such services. It is difficult to concoct a reasonable explanation for the choice of the Government.


Over the years, the gaming industry has contributed an insignificant percentage to the revenue target of the Federal Government when compared to the relatively robust revenue that the industry generates yearly. As such, the Government seeks to increase the revenue contribution from the gaming industry by automating taxation of online gaming activities such that there exists a central control system whereby activities of gaming operators are taxed at initiation and immediately remitted to the Government’s treasure. This system will eradicate leakages and ensure that appropriate taxes are charged on every online gaming transaction.

Please do not treat the foregoing as tax advice as it is only an expression of our Tax Information Service. All enquiries should please be directed to our TaxThursday Desk at; +234 700 TAXAIDE or any of our following personnel:

     Adeola Adefuye Associate  
           Bidemi Olumide Partner  

[1] [2008] 2 NWLR

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