The Federal Inland Revenue Service (FIRS) is embarking on a significant digital transformation initiative centered around the implementation of an electronic invoicing system, or e-invoicing. This system is poised to revolutionize tax administration in Nigeria, aiming to enhance tax compliance, increase transparency in business transactions, and ultimately boost the nation’s tax-to-GDP ratio. This move aligns with the government’s goal of achieving an 18% tax-to-GDP ratio, a substantial increase from the current 10.6%, as reported in the Revenue Statistics in Africa 2023. The FIRS sees e-invoicing as a critical tool to bridge the gap between current tax revenues and the targeted revenue generation needed for national development. The FIRS launched the National E-Invoicing Solution in 2024 and views it as a cornerstone for modernizing tax processes and gaining real-time insights into business financial data.
Recognizing the pivotal role of tax consultants in the successful adoption of this new system, the FIRS organized a stakeholder engagement forum in Lagos specifically targeted at consultants serving large taxpayers. These consultants are considered key partners in the transition to digital tax administration. The FIRS emphasized the need for consultants to champion the adoption of e-invoicing among their clientele, provide training and support for its integration, and advocate for compliance. This partnership is crucial for effectively communicating the benefits and requirements of the e-invoicing system to businesses and ensuring a smooth transition. The FIRS believes that by working closely with tax consultants, they can achieve a broader understanding and acceptance of the new system, minimizing potential resistance and maximizing its impact.
The FIRS underscored the imperative for tax consultants to embrace this digital shift and guide their clients through the technological integration process. The migration from manual to digital invoicing represents a fundamental change in tax procedures, and consultants are seen as the bridge between the tax authority and taxpayers, facilitating communication and ensuring a seamless transition. They are expected to educate their clients about the advantages of the e-invoicing system, assisting them in adapting to the new requirements and integrating the solution into their existing business operations. This collaborative approach is essential for ensuring widespread adoption and minimizing disruption during the implementation phase.
Improving Nigeria’s tax-to-GDP ratio is a primary objective of the e-invoicing initiative. The FIRS believes that by enhancing transparency and minimizing opportunities for tax evasion, the e-invoicing system will significantly bolster tax compliance and contribute to achieving the government’s 18% target. This increased revenue is vital for funding public services and supporting economic development, making the successful implementation of the e-invoicing system a crucial element of the nation’s economic strategy. This move toward digitalization is also in line with global trends in tax administration, aiming to create a more efficient and transparent tax system.
The FIRS outlined a phased rollout plan for the e-invoicing system, with a targeted go-live date of July 2024. The agency has been actively engaging with stakeholders, including tax consultants, to ensure they are well-informed about the system’s features, benefits, and implementation timeline. These engagements aim to build consensus and foster collaboration among all stakeholders, ensuring a smoother transition and minimizing potential challenges. The FIRS highlighted the advantages of the system, emphasizing its potential to streamline business operations, simplify tax administration, and improve tax compliance – a win-win situation for both taxpayers and the tax authority.
The e-invoicing project manager, Mohammed Bawa, expressed optimism about the receptiveness of tax consultants to the new system, indicating general agreement that this is the right direction for the country’s tax system. This positive sentiment suggests a promising outlook for the adoption and implementation of the e-invoicing solution, paving the way for a more efficient, transparent, and modern tax administration system in Nigeria. The hope is that this collaborative effort with tax consultants will drive increased tax compliance, ultimately boosting the country’s tax revenue and contributing to its economic growth. The FIRS believes that this digital transformation will not only improve revenue collection but also strengthen the overall business environment and contribute to the ease of doing business in Nigeria.
