Digitalizing Tax in Nigeria: Understanding the National E-Invoicing Mandate for Major Corporations

Contributor: Janeth Udoka

Introduction
The Federal Inland Revenue Service (“FIRS” or “the Service”) has issued a Public Notice announcing the formal introduction of the National E-Invoicing Regime under the Electronic Fiscal System (EFS), specifically targeted at Large Taxpayers. The E-Invoicing solution implemented using the Merchant Buyer model is scheduled to take effect from 1 August 2025. This development follows the successful completion of a pilot phase, which commenced in November 2024, during which the Service engaged a select group of Large Taxpayers, conducted extensive onboarding exercises, and consulted with stakeholders across major economic sectors^[1].

Scope and Requirements of Nigeria’s E-Invoicing Mandate
Effective from 1st August 2025, the pilot phase of the National E-Invoicing initiative shall conclude. Thereafter, all large taxpayers defined as entities with an annual turnover of ₦5 billion or above shall be mandatorily required to register for and integrate their invoicing systems with the Federal Inland Revenue Service (FIRS) E-Invoicing platform. Such integration shall facilitate real-time generation, validation, and transmission of invoices through the approved electronic invoicing channels. To ensure a seamless transition and compliance, the FIRS shall provide ongoing technical assistance to affected taxpayers and accredited software providers, organise onboarding workshops and training sessions, and make available comprehensive integration guidelines and documentation^[2].
The mandate applies to all VAT-registered entities engaged in B2B, B2G, and high-value B2C transactions. For Business-to-Business (B2B) and Business-to-Government (B2G) transactions, a pre-clearance framework shall apply. The Federal Inland Revenue Service Monitoring and Billing System (FIRSMBS) is required to validate all invoices before issuance. After validation, FIRS generates a Cryptographic Stamp Identifier (CSID) and Invoice Reference Number (IRN) within two to four hours. The validated invoice, embedded with a Quick Response (QR) code, is transmitted to the purchaser via an accredited Access Point Provider. For B2C transactions exceeding ₦50,000, suppliers must report the invoice details to FIRSMBS within 24 hours. This near-real-time reporting mechanism aims to improve VAT compliance, accuracy, and transparency^[3].

Legal framework for E-invoicing

The Federal Inland Revenue Service (FIRS) is implementing electronic invoicing (e-invoicing) under Sections 25 and 26 of FIRSEA, which allow the FIRS to automate tax administration processes, including assessment, collection, and information gathering. Taxpayers are required to provide access to relevant information stored on their devices or cloud computing platforms. The proposed tax legislation in Nigeria includes provisions that will take effect upon enactment. Section 156(1)–(2) of the Nigeria Tax Bill mandates that taxable individuals making supplies must adopt and implement the fiscalisation system introduced by the FIRS, which may include fiscal devices, software applications, and secured communication networks for electronic invoicing and data transmission.

Section 99 of the Nigeria Tax Administration Bill outlines penalties for non-compliance with e-invoicing requirements, including an administrative penalty of ₦200,000, 100% tax due, and interest charged at 2% above the Central Bank of Nigeria’s Monetary Policy Rate per annum^[4].

Technical Requirements:

To comply with the MBS, businesses must adopt systems meeting specific technical standards^[5]:

1. Invoice Format Requirements: All electronic invoices (e-invoices) must be generated in either XML or JSON format and shall comply with the Business Invoice Standard (BIS) Billing 3.0, structured in accordance with the Universal Business Language (UBL) schema.
2. Mandatory Invoice Content: Each invoice must contain a minimum of fifty-five (55) specified data fields, which include, but are not limited to, the full details of the supplier and buyer (inclusive of their VAT registration numbers), comprehensive item descriptions, quantity and price of goods or services, applicable taxes, a unique Invoice Reference Number (IRN), a Quick Response (QR) code, and a valid digital signature.
3. Validation and Clearance Procedures:

• For Business-to-Business (B2B) and Business-to-Government (B2G) transactions, all invoices are subject to mandatory pre-clearance through the Federal Inland Revenue Service’s MBS (Monitoring, Billing, and Settlement) platform. Upon validation, such invoices shall be issued a Clearance Serial Identification (CSID) and an IRN within a period not exceeding two to four (2–4) hours.
• For Business-to-Consumer (B2C) transactions exceeding ₦50,000 in value, the invoice must be reported to the FIRS within twenty-four (24) hours of issuance.

1. Platform Integration: All taxable entities are required to establish system integration with the MBS platform through RESTful Application Programming Interfaces (APIs), enabling real-time, automated invoice submission and validation.
2. Data Security and Compliance: All e-invoice data shall be encrypted using Advanced Encryption Standard (AES) with 256-bit key strength and transmitted over Transport Layer Security (TLS) version 1.3. The system must also conform to ISO/IEC 27001 standards for information security management and comply with all applicable provisions of the Nigerian Data Protection laws.
3. Currency Compatibility: The e-invoicing system accommodates transactions in all recognized international currencies, thereby supporting cross-border trade and international business operations.

What does the e-invoicing mandate entail:
Nigeria’s government has mandated the issuance, transmission, and receipt of structured electronic invoices for all companies operating within the country, including non-resident entities registered for VAT purposes. These invoices must conform to the structured Universal Business Language format and be exchanged via the Pan-European Public Procurement On-Line (PEPPOL) network, an internationally recognized framework for electronic procurement and invoicing. PEPPOL facilitates secure and standardized exchange of electronic business documents between trading partners through its four-corner model. As a result, affected companies must either become PEPPOL System Integrators or Access Point Providers or engage the services of approved e-invoicing solution providers^[6].

Accreditation, Compliance, and Penalties

Nigeria requires system integrators and Access Point Providers to obtain accreditation from the National Information Technology Development Agency (NITDA) to provide e-invoicing services. This includes demonstrating technical competence, holding valid information security certifications, and having Peppol Authority accreditation for cross-border interoperability. Providers must also demonstrate adequate financial capacity for sustained operations and data integrity. Taxpayers are required to retain e-invoices for a minimum of 24 months, with comprehensive audit trails documenting user access and data modifications. Non-compliance can result in penalties, such as a daily fine of ₦50,000 for non-compliant B2C transaction data and disallowed VAT input claims. Service providers failing to meet NITDA’s standards may have their accreditation revoked after regular audits^[7].

Conclusion:

The National E-Invoicing Mandate in Nigeria is a significant change in tax administration, aiming to promote transparency, reduce tax evasion, and enhance real-time transaction monitoring. The Federal Inland Revenue Service requires compliance efforts for system integration, data security, and audit readiness. However, the long-term benefits include improved efficiency, streamlined reporting, and greater fiscal accountability. Businesses are encouraged to act promptly, align their operations with the new regime, and engage accredited providers to avoid penalties and ensure compliance.

REFERENCE

1. Introduction of National E-Invoicing Regime for Large Taxpayers (July 2025) available at https://assets.kpmg.com/content/dam/kpmg/ng/pdf/2025/07/Introduction%20of%20National%20E-Invoicing%20Regime%20for%20Large%20Taxpayers.pdf accessed July 2025. ↑
2. Ibid. ↑
3. Nigeria’s E-Invoicing Mandate: What Businesses Need to Know Ahead of 2025; VATIT available at https://vatit.com/blog/nigerias-e-invoicing-mandate-what-businesses-need-to-know-ahead-of-2025/ accessed in July 2025. ↑
4. Key facts about proposed e-invoicing in Nigeria; PWC. available at https://www.pwc.com/ng/en/assets/pdf/key-facts-about-proposed-e-invoicing-in-nigeria.pdf accesed July 2025. ↑
5. Nigeria’s e-Invoicing Revolution: A Comprehensive Update for 2025; available at https://www.taxilla.com/blogs/nigeria-einvoicing-2025-updates accessed July 2025. ↑
6. Ibid. ↑
7. Ibid. ↑