The Federal Inland Revenue Service (FIRS) said it has mandated payment gateways in Nigeria to report all transactions passing through their systems for tax compliance monitoring as it rolled out e-invoicing for major businesses in the country.
Payment gateways are online platforms licensed by the Central Bank of Nigeria (CBN) that enable businesses to securely process electronic payments from customers.
They include fintechs like Flutterwave, Paystack, Remita, and Interswitch, among others.
The Acting Director of Tax Automation at FIRS, Mike Adoga, who disclosed this during a 2-day workshop on the e-invoicing solution in Lagos, said the submission from payment gateways is imperative to ensure that all business transactions pass through the FIRS Merchant Buying Solution (MBS).
“If you’re tempted as a taxpayer not to declare your invoices on the invoicing platform, that would not be a very good idea, because we have given all the payment gateways the responsibility of reporting every payment that passes through them to us,” Adoga told the stakeholders.
Bolstering Nigeria’s tax-to-GDP ratio
Explaining the rationale for the new automated tax system, Adoga cited reports indicating that Nigeria’s tax-to-GDP ratio is hovering around 10%.
“What this means is that only 10% of taxable transactions have been captured. That’s not good for us as a country. This is why we put the frameworks in place to enable us to do the right thing more easily,” he said.
- He noted that the e-invoicing project called Merchant Buyer Solution is a national project championed by FIRS in partnership with the Ministry of Finance, Nigeria Customs Service, CBN, and the National Information Technology Development Agency (NITDA) as technology governance partner.
- According to him, the objective of e-invoicing is to be able to track all transactional data and reduce cases of arguments during tax filings.
“If we’re part of the transaction from the beginning, when it’s time to establish your profit, tax liabilities that come from your profit, there’ll be less argument, there’ll be less audit and compliance will be higher,” he said
What you should know
The FIRS e-invoicing, also known as the Merchant Buyer Solution (MBS), is a digital system implemented by the FIRS to facilitate the issuance and management of electronic invoices.
This system replaces traditional paper-based or electronic invoices with structured digital invoices for all business transactions, aiming to enhance tax compliance, streamline processes, and improve transparency in tax administration.
- The e-invoicing system is designed for various transaction types, including Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Government (B2G).
- While over 1,000 companies are said to have onboarded on the platform as of August 1, which was the initial deadline set by the FIRS, the Service has extended the deadline by three months to November 1, 2025.
- According to the FIRS, onboarding on the e-invoicing platform is mandatory for companies with an annual turnover of N5 billion and above, and there are currently about 5,000 of them.
