Lottery players in Nigeria will pay additional 5% to Govt. as VAT
Government of Nigeria is rolling out plans to fetch more money from the lottery and gaming industry.
The industry, which is largely informal is a money spinner. Although there is a National Lottery Regulatory Commission (NLRC) which tries to manage shylock operators, operators rip bet players off.
Second, taxing the lottery industry does not have the tax quality of certainty. Tax authority in Nigeria, the Federal Inland Revenue Service (FIRS) is now beaming its searchlight on the lottery sector as the FIRS tries to make over N8 trillion it has promised to bring to the government coffers in 2019.
But it is going to be an additional burden on lottery players. Currently, bet placements does not include Value Added Tax (VAT). But with the current plan, players will pay an additional 5% of the original cost of all lotteries.
If this is properly harnessed, it could add at least N500 billion to VAT collection in Nigeria.
Lottery operators are concerned that increasing the cost of placements may scare players. Both the FIRS and the NLRC have started processes to automate the collection of VAT in the lottery and gaming businesses in Nigeria.
What they want to achieve is immediately a betting placement is made, a tech application will automatically calculate the VAT component and give a bill to the operator. The player, who is the final consumer bears the cost of the VAT.
At an interactive session with operators of lottery businesses in Lagos on Monday, the Executive Chairman of FIRS, Tunde Fowler said the automation of collection of VAT from all betting placements is a lawful way of raising the country’s revenue profile to enable the government function optimally.
Fowler said the FIRS in partnership with relevant stakeholders had earlier automated VAT collection in some other sectors such as Aviation and stated that the successes recorded in those sectors would be replicated in the Lottery Industry.
“Tax has to do with the law. What we are doing is to find a way to make tax collection seamless, convenient and efficient. We are automating VAT across various industries in the country. What we are doing with the gaming industry is not strange. This automation is not intended to harm the industries, rather it is meant to improve the lives of everyone because VAT revenue is shared among the three tiers of government and it is used to provide social amenities and make life better for everyone. So, at the end, all of us win”, Fowler said.
Fowler said that the addition of 5 percent VAT would not discourage Lottery businesses but would rather strengthen them.
“Let us think of what we can do for this country. The 5 per cent VAT will not harm the Lottery businesses”, he said.
The Director-General of the NLRC, Lanre Gbajabiamila noted that the automation of VAT collection in the lottery businesses is a well thought out initiative which would work seamlessly.
“The NLRC and the FIRS are working together to ensure that this automation process is seamless. The importance of taxation cannot be overemphasized. VAT is essentially a consumption tax. In the gaming industry, lottery agents fail to collect VAT thereby causing loss of revenue to the government. Lottery is taxable and we have to comply with the law. Therefore, thinking out a way to solve this problem is a welcome development. The NLRC is not going to sit down and watch the lotto businesses in this country fold up. We will work together to ensure that they succeed.
Technical partner and software provider for the automation process in the lottery sector, Zurich Technology assured Lottery operators that it has developed a software that will make the payment process seamless, efficient and transparent.
Chairman of Zurich Technology, Adeniyi Oyemade said the automation software provides a transparent system that allows the FIRS, the NLRC and Zurich Technology to have access to the payment portal and monitor all transactions.
In their presentation, Zurich Technology said: “Now, the VAT component is added to the original cost of betting which the consumer will pay for. The software automatically calculates the VAT component of all transactions within a 21-day period and gives a bill to the Lottery Operator which the Operator will pay to the FIRS”.