• Friday, March 29, 2024
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FIRS proposes VAT charges in the lottery sector

FIRS

The Federal Inland Revenue Service (FIRS) in its efforts to generate revenue for the government has proposed VAT charges in the lottery and gaming sector. The VAT charges will be exercised according to the tax laws with a 5 percent charge on every stake of the consumer.

This was made known at the stakeholder’s engagement on VAT automation of the lottery and gaming sector between the FIRS and the National Lottery Regulatory Commission (NLRC) held on Monday in Lagos.

Speaking at the forum, executive chairman of the FIRS, Babatunde Fowler stated that although the lottery space has been in existence for some time therefore it is time for the industry to give back to the society therefore the use of VAT will be a more convenient as well as a transparent approach to carry out its civic duties.

Fowler disclosed that the taxes will be paid by the consumers of the service and not the operators adding that regular payment of taxes will provide more privileges and opportunities for the citizens highlighting that Nigeria has one of the low tax rates in the world which is used to encourage tax payers

“Tax has to do with law and the law says that for every transaction that is VATable, 5 per cent should be charged. You have to be aware that we are automating collection in all industries. This is not a tax on the business, but on a bettor who hopes to win. You also have to realize that 85 per cent of VAT goes to the state, which are supposed to be closer to us. In this case, we are all winners,” Fowler said.

Present at the forum was Lanre Gbajabiamila, NLRC Director-General who stated that lottery and gaming operators collect VAT from users of the industry’s services without remitting such to the government, a situation that results in revenue losses.

A presentation of the VAT payment platform by the Zurich Technologies Team showed that a software was developed to achieve a stress-free transaction between the FIRS and the lottery operators, adding that the software will have an automated system that will show the operator the VAT due after 21 days of transaction. The bill is then settled through the online platform, as the software allows operators to file VAT returns and is flexible enough to accommodate disputation over the figures, which operators can resolve with the FIRS through the provision of documents to back such claims.

The software which has a user friendly interface will be accessible to operators, lottery regulators as well as the FIRS, furthermore transactions will become more transparent and documented with the software

Industry operators, however, argued that automation has the potential of killing the industry, as the additional 5 per cent charge for VAT could discourage punters from using their services with the frequency they currently do. Speaking on behalf of lottery and gaming operators, Akin Alabi, founder of Nairabet and House of Representatives member-elect, said 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 argued that the FIRS should have consulted operators before taking the decision to impose 5 per cent VAT and the automation of collection adding that the FIRS should also see to the development of industries with the same passion used to collect taxes.

Fadeke Akeju another participant stated that the FIRS should endeavour to understand whatever industry that is to be taxed adding that the lottery industry is not a fully formalized industry and should be exempted from the regular VAT charges in order to foster a sustainable tax routine that will not crumble the industry.

 

Gbemi Faminu