June 24, 2019

State gaming regulators have called for a better understanding of their operations, unity of processes and licensing, especially from the lens of the National Lottery Regulatory Commission (NLRC).Under the aegis of Association of State Gaming Regulators in Nigeria (ASGRN), the body also kicked against plans by the Federal Inland Revenue Service (FIRS) to introduce Value Added Tax (VAT) on gaming in Nigeria. ASGRN added that implementing VAT in gaming could have a devastating effect on the economy.The body, which is however, silent about the “devastating effect”, noted that the constant impasse of the NLRC on their operations needed to be curbed. The body, which rose from a recent meeting, which comprised representatives from states currently regulating all-gaming activities, condemned the lingering issues of rights to regulate   the industry between states and the Federal Government’s agency and others. Jointly speaking after the meeting, the chairman of Enugu State Gaming/Lotto Commission, Harrison Ogara, and the Head, Pools and Betting Division of the Ogun State Internal Revenue Service (OGIRS), Felix Fagbohun, flayed the activities of the officials of NLRC, who they said were going from state to state to shut down gaming operators legally licensed by the State Government. ASGRN explained that it was illegal for a national agency, in the mold of NLRC to claim rights to regulate gaming activities clearly under the residual list in the Constitution of the Federal Republic of Nigeria (as amended) adding that such activities are tantamount to eroding the very essence of true federalism. Explaining further, Fagbohun enunciated that while some of its members have regulated the industry under gaming laws promulgated as far back as 1981 and 1991, the NLRC only came into existence in 2005”. Fagbohun stressed that ASGRN is operating from the constitutional realm adding that “for NLRC to assume the roles it is playing now, the Commission must first seek for an amendment of the Constitution of the Federal Republic of Nigeria, because as it is today, gaming regulatory power lies in the states.” While recounting some of their latest issues with NLRC, Ogara said: “When we noticed the obvious infraction on the provisions of our statute, the states were taken aback and surprised by this act, since the NLRC itself had reached out to the states to explore a joint approach to regulations, a development that was warmly embraced and supported by a few states. However, following concerted efforts of some of the states a lot of progress had been made, until this unfortunate act by the NLRC.” Ogara emphasised   that   the   authors of   the   Constitution   gave   the regulatory role to states because of the peculiar nature of the industry, states and their religious inclinations. “Nigeria is a Federation where the three tiers of government are expected to act independently together. We are also aware that there are cases in Supreme Court seeking for clarification over who has rights to regulate gaming.” While justifying the right of the state to regulate gaming, the body pointed to the recent Bauchi State Government’s ban on all gaming activities in the State citing several reasons. “This singular realisation that gaming/gambling is prohibited by some religions and other factors led to the placement of gaming regulation in the Residual List of the Constitution. “As such, states that permit gaming have the inherent constitutional right to regulate gaming.  ASGRN  is  therefore calling on  NLRC  to  understand that  legally,  its  regulatory  power  only covers the ambit of the Federal Capital Territory and setting up a viable National Lottery to challenge  what  is  currently available  in  other countries along  the West African  Sub-region.”The body further disclosed that Ghana Lotto for instance is very popular in Nigeria and asked why Nigeria cannot float a similar lottery?” Reacting to the news that the States were making arrangements to float another body charged with the responsibility of issues regarding gaming taxes and licensing of gaming operators, Ogara said: “In   fullness   of   time   and   after   all   due   diligence   and   consultations   have   been concluded, we intend to establish a Joint Gaming Board (JGB) (one of the outcomes of the roundtable discussions between the States and NLRC), whose duty will be to harmonise and design a unified tax regime among the regulating states. On the issue of licenses, we shall leave it for the respective states to decide.”   Source: Guardian

As the Federal Inland Revenue Service (FIRS) prepares to impose Value Added Tax (VAT) on online transactions, the questions on many lips is how can it work in Nigeria? “What Nigeria (FIRS) needs to do is to first study digital economy; What does it mean? In which different areas do we have it? What are the issues, difficulties in collecting its taxes? What is the best practice that has been adopted around the world? “ So advised Mr Taiwo Oyedele, a  partner with PwC on Tax and Regulatory services. “It is difficult to deal with digital economy, e-commerce inclusive. Even the largest and the most powerful economy in the World, the US, is still struggling with this digital economy. But they have gone a little bit ahead of the rest of us. So we can then borrow from some of their initiatives,”Oyedele added. The FIRS Chairman, Mr Babatunde Fowler, in far away New York, USA, recently said FIRS would soon begin collection of VAT on online transactions. According to him, “soon, we will ask banks to impose VAT on online transactions for purchases of goods and services.” He explained that the online transactions tax is something not new.  “It actually should be in existence. We will certainly follow up to make sure that every VAT that is due to be collected is collected, ” he stated, adding that the move was part of measures by FIRS to meet its N8 trillion revenue target for 2019. To heed Oyedele’s advice, let’s see how  this  VAT model is being practised in some climes: Remote sellers’ tax in US On June 21, 2018, the United States Supreme Court fundamentally changed the rules for collection of sales tax by Internet-based retailers. According to www.nolo.com, in its decision in South Dakota v. Wayfair Inc., the court stated that individual states can require online sellers to collect state sales tax on their sales. This ruling overturns the court’s 1992 decision in Quill Corporation v. North Dakota. The Quill case prohibited states from requiring a business to collect sales tax unless the business had a physical presence in the state. Online sales tax in UK Her Majesty’s Revenue and Customs (HMRC), the tax authority in the United Kingdom, as of 2017, approached sellers (on internet platforms) directly and via the marketplaces such as Amazon and eBay,  searching for non-VAT compliant non-UK sellers. According to SimplyVAT.com, quoted by blog.taxJar.com, if you are a non-resident UK business and hold stock in the UK, either in a 3PL centre such as Amazon, you have created a taxable supply and have an obligation to VAT register in the UK. If a seller has been trading in the UK for many years without a UK VAT number, HMRC does want the seller to pay the back taxes. Once a seller registers for VAT and has to catch up on a lot of historical returns , which means they will have a lot of back-dated taxes to pay, HMRC will give the seller time to pay as long as the seller offers a reasonable payment plan. Likely scenario in Nigeria In an interview with Daily Sun even before Fowler announced the plan, Oyedele painted a likely scenario in Nigeria this way “Take Amazon for example: if you want to order something from Amazon, you can open your computer now or your phone, just log on to the internet. And you can order. Now let’s say you order handset. The handset in Nigeria is liable to VAT. But Amazon is not a Nigerian company. It is supposed to charge VAT. They don’t even know whether there is VAT in Nigeria and they are not even interested. The phone is $50. They have not put VAT on it.   Source: Sun News