The World Bank has proposed that the federal government impose an 8 percent ‘ad valorem’ tax on gambling and betting (online betting inclusive) stakes in the country to help generate revenue going forward.

Rajul Awasthi, Senior Public Sector Specialist and Co-lead of the Domestic Resource Mobilization Global Solutions Group at the World Bank proposed this at the stakeholder engagement and consultation forum for the 2023 fiscal year, finance bill held virtually on Thursday.

Awasthi urged the government to include it in the 2022 Finance Act and projected that if the 8 percent tax is implemented, by 2023 the government will generate at least N114 billion in revenue.

“In addition to excises on harm goods, an excise on gambling and betting will capture revenue and increase cost for gamblers; by 2024 the tax can be reviewed to 12 percent which will generate revenue of N164 billion,” he said.

Making comparisons with other African countries, Awasthi said countries like Cameroon, Gambia, Ghana, Togo, Ethiopia, etc taxed betting and gambling between five percent and as high as 40 percent, especially on winnings.

The World Bank executive added that Nigeria has some of the lowest rates of excise tax and low excise collection in Sub Saharan Africa and proposed that excise taxes are increased on tobacco, nicotine products, spirits, wines, cigarettes, non-alcoholic beverages (NAB), etc.

He proposed specific, ad valorem and indexed tax rates of additional 10 to 30 percent on the products as well as an increase in the value per liter of some products.

Experts at the program however asked the federal government to create a balance between imposing additional taxes and helping businesses thrive in a tough business environment.

Ajibola Olomola, tax partner, KPMG Nigeria said in implementing taxes, the federal government should create a balance that will not adversely affect business owners who are already struggling.

Vivian Ikem, a regulatory professional in Nigeria’s Food & Beverage Sector said proposing an additional tax on the industry will be a final nail in the coffin for the industry especially those in the non-alcoholic beverages sector.

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“The industry is gradually dying even at the current rate of tax amid other numerous challenges,” Ikem said.

In his presentation, Nnamdi Obinwa, manager at KPMG urged the federal government to prioritize investments in major areas, especially in renewable energy.

According to him, Nigeria has focused more on investments from the oil and gas sector with separate legislation to govern operations in the industry.

He stressed the need for end-user incentives to encourage the adoption of renewable energy solutions by Nigerians, this may be in the form of tax credit for monies spent on investment in renewable energy solutions.

Speaking on the way forward, Obinwa advocated the need for transparency in tax reporting as well as withholding tax exemption for renewable energy equipment to manage cash flow challenges faced by players in the industry.

“The way forward is to implement VAT exemption for power-as-a-service using renewable energy which will reduce the overall cost for end users,” he said.