Executive summary

The Federal Inland Revenue Service (FIRS) has taken a major step forward in Nigeria's digital tax transformation agenda with the phased rollout of its e-Invoicing platform, beginning in July 2025. The new platform is designed to enhance tax compliance, improve data transparency and reduce revenue leakages. The e-invoicing mandate applies to all value-added tax (VAT)-registered suppliers, including domestic and foreign entities, covering business-to-business (B2B), business-to-government (B2G) and business-to-consumer (B2C) transactions. The pilot phase, which is expected to run from July through December 2025, will target large taxpayers with an annual turnover of five billion Nigerian Naira (N5b) or more, with plans to include medium and small businesses over time. During this phase, in-scope companies will be required to issue all invoices through the platform.

This development aligns Nigeria with global trends in electronic tax administration and is supported by a real-time pre-validation model influenced by the Pan-European Public Procurement Online (PEPPOL) e-invoicing framework. The Merchant Buyer Solution (MBS) platform facilitates the real-time generation, validation, storage and exchange of invoices. Each invoice will receive a unique reference number, aiming to ensure authenticity and enable FIRS to have real-time visibility into transactions.

Key features of the e-invoicing regime

Real-time invoice management and reporting requirement

Continuous transaction controls will apply for B2B/B2G invoices and near-real-time reporting for B2C invoices. In practice, suppliers will be required to submit B2B and B2G invoices to the FIRS for clearance before providing them to buyers; cleared invoices receive an Invoice Reference Number (IRN) and cryptographic stamp marking them as authentic. Although B2C invoices are issued without pre-clearance, they must be reported to the FIRS within 24 hours of issuance.

Applicability

All transactions subject to VAT in Nigeria are in scope. This includes domestic and cross-border supplies of goods or services.

Structured format requirements

Invoices must be issued in a structured UBL/XML format, adhering to international standards. FIRS has adopted the PEPPOL network conventions to help ensure that comprehensive transactional data is captured.

Technology and integration requirements

The MBS system follows the four-corner model (1: supplier; 2: supplier's access point; 3: buyer's access point; 4: buyer), meaning that each party (supplier and buyer), once connected, can use an access point to send/receive invoices, enabled by an Access Point Provider (APP). APPs are licensed service providers responsible for secure invoice signing, transmission and reporting. The National Information Technology Development Agency (NITDA) has published pre- and post-accreditation requirements for these service providers, and taxpayers are at liberty to choose their APP.

In terms of security, the system adopts international security standards, such as ISO 27001, providing best practices for information security management and ensuring data security. The e-invoice data are also expected to be transmitted and stored in encrypted formats, such that only authorized parties may be able to access the invoice details.

Legal and regulatory framework

The e-invoicing mandate is grounded in Nigeria's tax laws, particularly the Federal Inland Revenue Service (Establishment) Act, 2007, which empowers the FIRS to leverage technology to automate tax administration processes. Proposed amendments under Nigeria's tax reform bills also reinforce these powers, requiring taxpayers to implement the "fiscalisation system" deployed by the FIRS, as well as to grant access for the deployment of this technology within 30 days of receiving the deployment notice.

The bills go further to impose penalties for noncompliance. Specifically, Section 103 of the Nigerian Tax Administration Bill (NTAB) imposes a penalty of N1m for the first day in which a taxpayer defaults in granting access to the FIRS for the deployment of the technology, as well as N10k for each subsequent day of noncompliance. Furthermore, Section 104 of the NTAB stipulates that failure to process taxable supplies through the fiscalisation system will lead to an administrative penalty of N200k plus 100% of the tax due, in addition to interest of 2% above the Central Bank of Nigeria monetary policy rate per annum. Noncompliant invoices also risk the loss of input-VAT credit.

Benefits of e-invoicing

For taxpayers, the e-invoicing system offers:

• Efficiency and cost savings: Automation reduces manual entry and paperwork, minimizing errors and processing costs
• Reduced fraud and disputes: Real-time clearance by FIRS enhances invoice authenticity, reducing disputes.
• Improved cash flow management: Faster invoice issuance and tracking improve billing and payment follow-ups.

For the government, benefits include:

• Real-time revenue visibility: FIRS gains instant access to transactional data, enabling better compliance checks and fraud detection.
• Increased collections: E-invoicing is expected to improve VAT collections by curtailing the informal economy.
• Enhanced transparency: Unified data allows for more transparent and efficient tax administration.

Next steps: implementation considerations for businesses

Actions that businesses will want to consider include:

• Conducting an impact assessment: Evaluate current invoicing systems and determine integration needs. This will include the review of company's general ledger mappings to ensure alignment with the FIRS MBS system standards.
• Registering on the FIRS MBS portal: Engage with the portal and provide feedback to FIRS.
• Planning for integration: Prepare enterprise resource planning (ERP) systems for API integration, deciding on the system integration strategy to use.
• Upgrading systems and train staff: Update invoicing workflows and ensure staff are trained on new processes.
• Monitoring deadlines: Prepare to issue qualifying invoices via MBS from the pilot date.

Implications

Throughout the transition to Nigeria's e-Invoicing regime, affected businesses should consult appropriate tax advisors who can help design tailored solutions to reduce the chance of operational disruption and improve alignment with FIRS requirements.

Examples of this support may include:

• Process diagnostic and readiness assessment: Evaluating current invoicing framework and digital maturity to identify compliance gaps, integration needs and resource requirements
• ERP and system integration support: Mapping invoicing data to meet FIRS's validation protocols, including API interfacing with ERP and accounting platforms
• Workflow design and control enhancements: Embedding e-Invoicing into day-to-day operations with clearly defined roles, exception-handling procedures and internal controls
• Tailored implementation roadmap: Rolling out a phased transition plan to reduce impact on business continuity — especially for organizations with high transaction volumes or complex billing structures
• Staff training and change management: Equipping tax, finance, and operations teams with the knowledge to manage invoice validation errors, regulatory expectations and recurring transaction nuances
• Regulatory liaison and compliance monitoring: Interacting with the FIRS on technical clarifications, platform updates and post-implementation support