Nigeria’s Tax Act 2025 Clarifies VAT Treatment for Betting and Lottery Stakes

Nigeria’s gambling and lottery sector has received a major clarity boost with the signing of the Tax Act 2025. The law, enacted by President Bola Ahmed Tinubu on 26 June 2025 and effective from 1 January 2026, confirms that money wagered on games of chance is exempt from Value Added Tax (VAT).

The reform is part of a wider tax overhaul led by the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele. The committee’s goal has been to simplify Nigeria’s tax system and remove ambiguities that, until now, left operators unsure how to apply VAT rules. Under Section 185(m), the Act explicitly exempts “money, stakes or securities including interest in money or securities” from VAT. It also defines a “stake” as the amount wagered on a game, making it clear that player wagers themselves are not taxed.

At the same time, Section 148 retains Nigeria’s standard VAT rate at 7.5%, which applies to most goods and services, “Subject to the provisions of Part IX of this Chapter, VAT shall be charged on the value of all taxable supplies at the rate of 7.5%,” the Act reads.

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Corporate taxation, however, still applies. Section 62 specifies that income from lottery and gaming businesses is subject to corporate income tax. The same section details the deductions operators can claim when calculating taxable profits:

“In determining the assessable profits of lottery and gaming trade or business, the following deductions shall be allowed, in addition to other deductions allowed under Chapter Two of this Act:

(a) any amount paid as winnings, prizes or similar payments from the relevant Prize Fund;

(b) agency commission expenses incurred; and

(c) levies paid to relevant regulatory and government authorities as contained in relevant federal or state laws.”

These provisions ensure that businesses are taxed on actual profits, not merely the money moving between players and operators. The VAT exemption comes after years of uncertainty, during which the treatment of wagers varied widely among operators. In recent years, Nigeria’s gaming sector has seen heightened scrutiny, with the Federal Inland Revenue Service (FIRS) issuing compliance guidelines to strengthen tax collection, especially from digital platforms.