The Nigerian Tax Act 2025 has officially exempted “stakes” from Value Added Tax (VAT), removing a key provision that previously impacted the operations of gaming and lottery operators.
This is according to Section 185, Subsection M of the Act, which includes “money, stakes or securities including interest in money or securities” in its list of VAT-exempt items.
The move provides clarity that the amount wagered on a game (stake) should not attract VAT, prompting operators to update their systems to reflect this exemption.
Section 185 of the Nigerian Tax Act 2025 outlines the categories of goods and services exempted from VAT. Specifically, Subsection M exempts “money, stakes or securities including interest in money or securities.”
The Act also defines “stake” as the amount wagered on a game.
According to a report by PwC, this express exemption confirms that wagering stakes are outside the scope of VAT.
PwC explains that this interpretation aligns with general VAT principles, which exclude the mere transfer of money—something a stake represents in a gaming or betting context.
However, while stakes are exempt from VAT, Section 62 of the same Act clarifies that income from lottery and gaming businesses remains taxable under corporate income tax provisions.
The law allows certain deductions in assessing taxable profits, including winnings paid out, agency commissions, and regulatory levies.
The Act provides broader definitions and clarifications around the scope of gaming and lottery operations.
“Gaming” includes all forms of gambling and wagering, including digital formats like video poker and slot machines.
“Lottery” covers schemes tied to skill and chance, including those based on real or virtual sporting outcomes.
These definitions ensure that while VAT does not apply to the initial money staked, the broader income from the business remains subject to other forms of taxation.
This reinforces the government’s intent to tax profits rather than transactions involving the mere transfer of funds.
PwC advises that gaming and lottery businesses should clearly distinguish between exempt “stakes” and taxable items like service fees, platform charges, or ancillary offerings.
This distinction will help prevent incorrect VAT charges and reduce the risk of regulatory disputes.
This exemption is particularly significant given past controversies and confusion over whether VAT applied to amounts staked, often leading to misinterpretation or inconsistent application by operators and tax authorities.
In recent years, Nigeria’s gaming sector has faced increased regulatory scrutiny and multiple tax proposals.
The National Revenue Service (NRS) had introduced compliance guidelines amid efforts to improve tax collection from digital platforms.
This new exemption offers clarity and potentially smoother operations for licensed gaming businesses, especially as digital gaming continues to grow rapidly in Nigeria.
