Nigeria’s New Tax Act Exempts Gaming Stakes From VAT

The Nigeria Tax Act 2025 has clarified that amounts wagered on gaming and lottery activities commonly referred to as “stakes” will be exempt from Value Added Tax (VAT), removing a source of uncertainty that previously affected operators in the betting, gaming and lottery sectors.

Under Section 185, Subsection M of the newly enacted tax law, “money, stakes or securities including interest in money or securities” are explicitly listed among items exempt from VAT.

The provision confirms that the amount wagered on a game (stake) should not attract VAT, prompting licensed gaming and lottery operators to update their billing and tax systems to reflect the change.

Tax professionals have welcomed the clarification, noting that it aligns with established VAT principles that exclude the mere transfer of money from the tax base.

A report by consultancy firm PwC explains that because a stake represents a transfer of funds rather than the provision of a good or service, it falls outside the scope of VAT.

However, the Act makes clear that while stakes are exempt from VAT, income derived from gaming and lottery businesses remains subject to other taxes, including corporate income tax under Section 62 of the same law.

Deductions in calculating taxable profits may include winnings paid out to customers, agency commissions and regulatory levies.

The law also provides updated definitions for the gaming and lottery sectors. “Gaming” is defined to include all forms of gambling and wagering, including digital formats such as video poker and slot machines, while “lottery” covers schemes based on skill and chance, including outcomes tied to real or virtual sporting events.

The definitions are intended to provide clarity for both regulators and businesses operating in the digital economy.

Industry advisers have urged gaming and lottery businesses to distinguish carefully between exempt stakes and other taxable items such as service fees, platform charges and ancillary offerings, in order to avoid improper VAT charges and reduce the risk of disputes with tax authorities.

The clarification comes amid broader tax reforms under the 2025 Tax Act, which take effect from January 1, 2026, and are part of the Federal Government’s ongoing efforts to modernise Nigeria’s tax regime, simplify compliance and stimulate economic activity.