The Federal Inland Revenue Service (FIRS) has said its electronic invoicing (e-invoicing) system will be instrumental in increasing Nigeria’s tax-to-GDP ratio by improving tax compliance, enhancing transparency, and curbing revenue losses.
Speaking at a stakeholders’ engagement for consultants to large taxpayers in Lagos on Monday, the Chief of Staff to the Executive Chairman of FIRS and Head of the Strategic Management Office, Tayo Koleosho, noted that the initiative, set for full deployment mid-year, is expected to improve tax reporting, minimize evasion, and align Nigeria’s tax administration with global standards.
He emphasized the significance of the initiative, stating, “Electronic invoicing helps to improve transparency, both on the business side and on the tax administrative side. Globally, it has helped to increase compliance because there is a lot of inter-data exchange between tax authorities and businesses.”
He explained that while compliance among large taxpayers was already above 90 percent, the national average remained below 50 percent due to enforcement challenges among smaller businesses. The e-invoicing system, he noted, would bridge this gap by automating tax reporting and ensuring seamless data exchange.
Koleosho further clarified the timeline for implementation, stating, “We are hoping that by July of this year, we will go live. The benefits of this system are ease of doing business, ease of tax administration, and ease of tax compliance. It is a win-win for all.” He assured businesses of FIRS’ support in integrating their accounting and enterprise resource planning (ERP) systems with the platform, emphasizing that technical assistance would be provided to facilitate a smooth transition. According to him, stakeholders’ responses have been overwhelmingly positive, with several large taxpayers already volunteering for the pilot phase.
Project Manager for the e-invoicing initiative, Mohammed Bawa, highlighted the crucial role of tax consultants in ensuring successful implementation. “Tax consultants play a critical role in tax administration because they sit between the tax authority and the taxpayers. This engagement is to enlighten them on where we are with the e-invoicing project and to seek their support in guiding their clients through the process,” he said. Bawa underscored the need for broad-based adoption, stressing that in a country as large as Nigeria, with a population of over 200 million, stakeholder collaboration was essential for the success of any tax reform.
He also placed Nigeria’s adoption of e-invoicing within the broader global context, pointing out that over 21 African countries, including Ghana, Kenya, and Rwanda, had already implemented the system. “Nigeria currently ranks 171 out of 190 countries in the ease of paying taxes. The only way to improve on this is to minimize human interaction in tax processes. We want to increase visibility into transactions so that all tax filings can be reported electronically without requiring physical visits to tax offices,” Bawa explained.
He added that the initiative aligned with the government’s broader objective of increasing the country’s tax-to-GDP ratio from the current 10.3 percent to 18 percent in three years.
The Coordinating Director, Compliance/Enforcement Group at FIRS, represented by the Director of Field Operations Management, Matthew Osanekwu, provided insights into the regulatory framework backing the initiative. He explained that Section 13A of the VAT Act mandates taxable persons to issue invoices, with non-compliance attracting penalties. “Failure to issue a tax invoice is an offense. The penalty is 50 percent of the cost of the transaction, and the issuance of invoices by unauthorized persons can lead to six months’ imprisonment,” he stated.
Osanekwu also reassured businesses of data security, noting that FIRS officials are bound by confidentiality laws. “Every officer of FIRS has signed an oath of secrecy, and any unauthorized disclosure of taxpayer information carries a penalty of six months’ imprisonment,” he affirmed. Calling on tax consultants to actively support the transition, he added, “Consultants act as bridge builders between tax authorities and taxpayers. You are recognized as partners in this process. The essence of this is to improve our compliance gap and increase our tax-to-GDP ratio.”
The FIRS noted that the initiative is expected to bring multiple benefits beyond compliance, including enhancing business efficiency by reducing administrative costs, improving tax reporting, and minimizing fraud. They assured stakeholders that the system was designed to integrate seamlessly with existing accounting platforms, with dedicated support available for businesses requiring assistance.
