New legislation confirms player wagers are VAT-exempt while reinforcing corporate tax obligations, providing greater certainty for operators and regulators across the gaming sector
Nigeria’s gambling and lottery industry has received a major regulatory and fiscal clarification following the enactment of the Tax Act 2025, which definitively settles the long-standing question of how betting and lottery stakes should be treated for Value Added Tax (VAT) purposes. Signed into law by President Bola Ahmed Tinubu on 26 June 2025 and scheduled to take effect from 1 January 2026, the Act forms part of a broader reform agenda aimed at simplifying Nigeria’s tax system and eliminating inconsistencies that have previously created uncertainty for businesses.
At the centre of the reform is the explicit exemption of money wagered on games of chance from VAT. Under Section 185(m) of the new legislation, “money, stakes or securities including interest in money or securities” are classified as VAT-exempt. The Act further defines a “stake” as the amount wagered by a player in a game, making it clear that the funds placed by customers on betting or lottery products are not considered taxable supplies for VAT purposes. This clarification resolves years of debate among operators and tax authorities over whether wagers themselves should be subject to the standard 7.5% VAT rate.
While player stakes are exempt, the legislation reaffirms that Nigeria’s general VAT framework remains in force for other taxable goods and services. Section 148 of the Act maintains the 7.5% rate on all taxable supplies, subject to the exemptions outlined in the law. As a result, ancillary services provided by gaming companies may still attract VAT, but the core wagering transaction is now clearly excluded.
Importantly, the VAT exemption does not remove the sector’s broader tax obligations. The Act confirms that lottery and gaming businesses remain fully subject to corporate income tax on their profits. Section 62 specifies that, when calculating taxable income, operators are permitted to deduct key cost items, including winnings and prizes paid out from prize funds, commissions paid to agents, and statutory levies remitted to federal and state regulators. This framework ensures that companies are taxed on their actual net earnings rather than on gross turnover or the flow of player funds through their platforms.
The reforms were developed under the leadership of the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele, whose mandate has been to modernise Nigeria’s tax system, close loopholes, and provide clearer guidance to both domestic and international investors. For the gaming industry, the new provisions are expected to enhance compliance, reduce disputes with the Federal Inland Revenue Service, and create a more predictable operating environment, particularly for digital and online betting platforms.
Overall, the Tax Act 2025 represents a significant step toward regulatory certainty in one of Africa’s largest gambling markets, balancing the need for effective tax collection with a clearer, more commercially realistic treatment of betting and lottery operations.
