FIRS introduces real-time direct collection of taxes from online gaming transactions

The Federal Inland Revenue Service (FIRS) has issued a Public Notice announcing its intention to deploy the Sentinal National Payment Gateway (“Sentinal” or “the Gateway”) developed by e-Technologies Global, a UK-based Fintech company.  Sentinal is a technology system that will provide the FIRS with the ability to collect taxes on gaming transactions in real time; thereby improving tax compliance with respect to companies providing online gaming services. 

Sentinal will allow integrated payment service providers to deduct taxes at transaction-points and remit same directly to Government’s Treasury.  Though there is no cost to Government, the fee for using Sentinal will be deducted from the payments due to the online gaming operators, which may pass the additional cost to their customers.  FIRS has mandated all Nigerian and non-resident companies (NRCs), offering online gaming services to Nigerian customers, to connect to the Gateway not later than 31 December 2022.  The FIRS enjoins affected companies to comply with its requirement or they will be penalized for failing to do so in accordance with relevant laws.


Though Sentinal can be deployed to collect taxes at source in real time from the e-commerce industry, the FIRS has limited the deployment to online gaming transitions for now.  It is possible that this may change in the future.  The FIRS’ attempt to capture online gaming transactions in the tax net and ensure tax compliance by the companies operating in the industry is unsurprising, given the significant growth and expansion of the industry in recent years.  With Nigeria’s revenue challenge as shown in the proposed 2023 Budget, the move to simplify tax compliance and collection of taxes in the industry from a transaction-point is timeous.

The adoption of Sentinal demonstrates FIRS’ attempt at using third-party technology to simplify tax compliance and collection for companies operating in a specific industry in Nigeria since Finance Act, 2021 amended Section 25 of the FIRS (Establishment) Act (FIRSEA), 2007.  The amendment authorizes the FIRS to utilize proprietary or third-party technologies for tax administration and information gathering in Nigeria.

However, while the possibility of penalty makes it inevitable for affected companies to oblige the FIRS, there are concerns that deploying an Application Programming Interface directly to taxpayers’ corporate accounting systems could be disruptive and may grant the FIRS access to non-tax related proprietary information.  Therefore, the FIRS must ensure that proper regulatory and control measures be in place to secure the confidence of the gaming companies and their customers in the operation of the Gateway.  Further, while the Public Notice mandates NRCs to comply with the FIRS directive of connecting to the Gateway, it is doubtful how the FIRS can enforce such compliance for the NRCs that may be critical of connecting such important part of their business to an unknown party’s application even though such companies may have significant economic presence in Nigeria.

Interestingly, the Federal Government’s Executive Order for Planning, and Execution of Projects, Promotion of Nigerian Content in Contracts and Science, Engineering and Technology (“the Order”) mandates ministries, departments and agencies of the Federal Government to give preference to indigenous companies when awarding government contracts to digital service providers.  It is debatable how Sentinal, which is developed and managed by a NRC, aligns with the mandate of the Order.  Hopefully, the recently signed Nigeria Startup Act will enable Nigerian companies develop similar technology (if not already in existence) that can be deployed for the e-commerce industry.

In the meantime, it is expected that the FIRS will issue guidelines on the modalities for the integration process in due course.

Enquiries on the Gateway and other related enquiries may be addressed to the or  

Please click here to read the Public Notice

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