Nigeria Introduces Permit For Offshore Operators

October 28, 2022
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​​​​​​​Nigeria has implemented a new digital tax collection system for offshore operators and introduced a new permit that does not require establishing a local company or creating an onshore presence.

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Nigeria has implemented a new digital tax collection system for offshore operators and introduced a new permit that does not require establishing a local company or creating an onshore presence.

The changes are aimed at stopping tax leaks from the gambling sector.

The Remote Operator Permit (ROP) will be valid for five years and costs $100,000 in year one and $50,000 per annum for the remaining four years, according to UK-based E-Technologies Global, which manages the new Sentinel National Payment Gateway (SNPG).

Operators that get the ROP will be connected to the SNPG. For now, existing licensees will not.

Once connected, ROP holders will have access to Nigerian payment service providers and pay a 4.5 percent gaming duty on all player deposits, which will be deducted automatically.

No further taxes will be payable in Nigeria, including no corporation tax as remote gambling operators will be non-domiciled.

ROP holders will also have to comply with the terms and conditions of the country’s federal gambling regulator, the National Lottery Regulatory Commission (NLRC).

NLRC director general Lanre Gbajabiamila, who has long called for the implementation of a centralised monitoring system for taxation, said the SNPG is “a huge step to allow us to capture gaming duty at the source”.

“We are welcoming all responsible offshore gaming operators to apply for a ROP as long as they pass all the relevant criteria including full AML screening and responsible gaming practices,” Gbajabiamila said.

An operator looking to acquire the new permit will need to have its primary gambling licence held in “any globally responsible gambling commission”, although it is not exactly clear which jurisdictions would qualify.

Muhammad Mamman Nami, executive chairman of the Federal Inland Revenue Service of Nigeria (FIRS), said the implementation of the new system is a reflection of the “challenging time” lots of governments are facing to increase tax revenue.

“Nigeria needs to innovate and harness technology to ensure that online transactions are taxed and accounted for,” Nami said, adding that the FIRS has been “very impressed” with the SNPG’s ability to provide it with tax reporting and monitoring tools.

David Kicks, CEO of E-Technologies, said the new permit is designed to “confer considerable benefit to responsible offshore operators who choose to be regulated, with the intention of driving grey market operators out of the country as stricter enforcement penalties come into play”.

Kicks added that his company is in talks with other African countries to implement a similar system.

The SNPG will instruct payment service providers to deduct taxes or charges at the point of transaction and remit funds in real time to the Treasury, according to a press release by the FIRS.

ROP holders will be integrated into the "Tax Pro Max" system of the FIRS and registered as "non-resident" companies.

E-Technologies will manage the application process for the new permit, including conducting necessary KYC/AML checks.

But the decision to grant a permit will be made by the NLRC.

Over the past several years, Nigerian politicians have tried to stop tax leakages from the gambling industry, including establishing a federal task force in 2020 to try and recover an expected N8bn (€17.7m) in backdated gambling taxes.

In July 2021, George Akume, the minister of special duties and intergovernmental affairs, said Nigeria’s gambling industry generated less than N1bn (€2m) for the government in 2019, during a speech at the National Gaming Conference.

The government minister said the revenue was “not only disappointing” but also “unsustainable and unacceptable”.

Last year, Nigeria’s National Lottery Trust Fund (NLTF) also called on the Economic and Financial Crimes Commission to help tackle corruption in the gambling industry and recover revenues owed to licensees it accused service providers of withholding.

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