FIRS to Implement Digital E-Invoice System to Enhance Tax Compliance

FIRS to Implement Digital E-Invoice System to Enhance Tax Compliance

The Federal Inland Revenue Service (FIRS) has announced plans to launch a new digital solution called the FIRS e-Invoice, aimed at improving tax administration and compliance across Nigeria.

This was disclosed by the FIRS Executive Chairman, Dr. Zacchaeus Adedeji, during the “Emerging Tax Matters” stakeholders’ engagement hosted by the Lagos Chamber of Commerce and Industry (LCCI) in collaboration with FIRS.

Speaking through Mrs. Oti Olaniyi, Acting Director of the Medium Taxpayers Department, Adedeji explained that the e-Invoice initiative aligns with the Tax Administration and Enforcement Act of 2007 and is part of FIRS’ ongoing digital transformation strategy.

The system is expected to facilitate real-time validation and storage of transactions across business-to-business (B2B), business-to-consumer (B2C), and business-to-government (B2G) transactions.An e-invoice is a digital document exchanged between a buyer and a supplier, allowing for automatic processing throughout its lifecycle.

The introduction of this system marks a significant step towards modernizing Nigeria’s tax infrastructure, ensuring greater efficiency, transparency, and compliance.

Adedeji highlighted the importance of leveraging technology to tackle the challenges and opportunities in the evolving tax landscape.

“Our collective efforts will pave the way for a more prosperous and resilient Nigeria,” he said, urging stakeholders to support the initiative through constructive feedback and collaboration.

The FIRS Chairman also addressed recent restructuring within the agency and the implementation of various tax reforms designed to promote sustainable growth and equitable development.

Among these reforms are tax incentives aimed at boosting local industries and fostering transparency.A major challenge for the tax agency remains the informal sector, which accounts for a large portion of Nigeria’s economy. To better engage with this sector, Adedeji revealed plans to introduce simplified tax regimes and registration incentives to encourage small and micro-businesses to participate in the formal tax system.

LCCI President, Mr. Gabriel Idahosa, praised FIRS for its ongoing reforms and emphasized the need for stronger collaboration between the government and the private sector.

He acknowledged that Nigeria’s tax system has undergone significant transformations to boost revenue and simplify compliance, noting FIRS’ ambitious target to increase tax collection by 57%, aiming for N19.4 trillion in 2024.

Nigeria’s current tax-to-GDP ratio stands at 10.86%, with a target to increase it to 18% within the next three years.

Idahosa stressed the importance of coordinated efforts to achieve this goal, recommending that tax policies support business innovation and remove barriers to foreign currency-denominated transactions to foster a more robust investment environment.

He further emphasized the critical need for trust between the government and citizens, stating, “For these reforms to succeed, businesses and citizens must embrace a culture of tax compliance.

”Meanwhile, TechDigest reported that FIRS failed to meet its approved revenue target for the first four months of 2024. While the agency was expected to collect N3.32 trillion from oil taxes, it recorded only N1.63 trillion, representing 49% of the target.

Despite missing the mark, FIRS maintains an internal goal of N7.5 trillion in tax revenue for the entire year.With the introduction of the e-Invoice system and ongoing reforms, FIRS hopes to overcome these challenges and achieve its broader revenue collection targets.