The Federal Inland Revenue Service (FIRS) has made a major move to improve tax compliance in Nigeria by launching a stakeholder engagement forum focused on its e-invoicing initiative.
The forum, held in Lagos, brought together key players from the manufacturing and oil and gas industries to deliberate on the rollout and practical application of the new e-invoicing system.
According to Sadiq Arogundade, the Lead Consultant for FIRS, the e-invoicing platform aims to streamline tax compliance by automating invoicing processes and simplifying bookkeeping efforts.
“We’ve developed an electronic invoicing system to help taxpayers and businesses manage their invoicing more efficiently,” Arogundade said. “However, it’s critical that we incorporate all use cases, feedback, and concerns from stakeholders during the system’s development.”
He explained that the main goal of engaging stakeholders is to collect input from businesses to fine-tune the platform. Highlighting its advantages, Arogundade noted, “Automating workflows significantly reduces the effort required for accurate bookkeeping. We want to integrate into that process so we can extract the tax elements directly from invoices and handle the tax calculations for businesses.”
This approach, he added, would ease administrative burdens and enhance the accuracy and timeliness of tax compliance.
Mike Adoga, Acting Director of Tax Automation at FIRS, emphasized the system’s potential to provide real-time visibility into transactions across sectors, thereby strengthening tax compliance.
“This is about enabling the electronic, real-time exchange of invoices between businesses and their customers using FIRS technology,” Adoga said. He also highlighted key benefits such as increased transparency, improved accuracy, and enhanced efficiency.
The e-invoicing platform is designed to automatically capture taxes such as Value Added Tax (VAT) at the 7.5% rate, as well as withholding tax, company income tax, and personal income tax.
Adoga explained that this system would help close revenue gaps, reinforce compliance, and bring Nigeria’s tax processes in line with international standards. “Withholding tax functions as an advance payment towards tax liabilities,” he noted, adding that relevant transaction data would also flow through the e-invoicing ecosystem.
While acknowledging some ongoing challenges, Adoga underscored the importance of continued engagement to dispel myths and improve understanding of e-invoicing. “Many have heard of electronic invoicing, but misconceptions persist,” he said. “These sessions are key to bridging that gap.”
He encouraged businesses to adopt the system, highlighting its potential to foster better compliance and minimize tax-related disputes.
For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.
