The Federal Inland Revenue Service (FIRS) has officially rolled out a Real-Time Transaction Monitoring System (RTMS) aimed at enhancing the transparency and efficiency of VAT compliance across Nigeria’s digital economy. This initiative mandates banks, card schemes, fintech companies, and payment service providers to integrate their systems with the FIRS platform to provide real-time data on all VAT-eligible electronic transactions.
According to TechCabal, this move is part of FIRS’s broader strategy to curb revenue leakages and improve oversight within the country’s expanding digital and financial services ecosystem.
Commenting on the development, FIRS Executive Chairman, Dr. Zacch Adedeji, stated:
“This system represents a transformative leap in transaction visibility. By monitoring VAT-eligible activities in real time, we are fostering a fair and transparent digital marketplace for all stakeholders.”
Under the new framework, financial institutions are now required to route eligible transactions through the FIRS monitoring portal, thereby granting the agency immediate visibility into taxable activities. While tax collection will not occur directly through the portal, the system will enable automated invoice reconciliation and taxpayer threshold assessments via a centralized dashboard.
FIRS has highlighted that the traditional tax monitoring infrastructure has struggled to keep pace with the scale and speed of digital transactions. The new system leverages real-time data capture, AI-driven validation, and end-to-end encryption to ensure accuracy and security of reported information.
This directive follows President Bola Tinubu’s assent on June 26, 2025, to four key tax reform bills—now enacted as the:
- Nigeria Tax Act,
- Nigeria Tax Administration Act,
- Nigeria Revenue Service (Establishment) Act, and
- Joint Revenue Board (Establishment) Act.
These legislative reforms reflect the ongoing efforts of the Presidential Fiscal Policy and Tax Reforms Committee to modernize Nigeria’s tax system, enhance revenue administration, and align fiscal governance with global best practices.
Following a stakeholder conference hosted by FIRS on July 22–23, 2025, the Executive Chairman reaffirmed the agency’s commitment to curbing Illicit Financial Flows (IFFs) by strengthening enforcement mechanisms, improving transparency in beneficial ownership structures, and deploying technology to detect tax evasion and trade mispricing.
Notably, most financial institutions currently report only transactions above ₦5 million (~$3,200), leaving a significant volume of micro-transactions untaxed and undocumented. The integration requirement aims to plug this gap in VAT collection and standardize the reporting of smaller taxable transactions.
Although the new tax laws will formally take effect in January 2026, the FIRS is relying on its existing powers under Section 25(4) of the FIRS Act to issue a 30-day compliance notice, requiring early integration with the RTMS.
It is important to note that while transaction data provides visibility into taxable activities, FIRS has clarified that financial data alone will not determine tax liabilities. Reported transactions will be reconciled against taxpayers’ self-assessments, and legitimate deductions will still apply in calculating final tax obligations.
Key Takeaways for Taxpayers and Financial Institutions:
- Immediate action may be required to comply with FIRS’s 30-day integration mandate.
- Operational adjustments are expected, particularly for payment processors, fintechs, and banks handling high volumes of micro-transactions.
- The RTMS is not a tax collection tool, but a data-driven compliance mechanism aimed at improving transparency and audit readiness.
- Stakeholders should evaluate system compatibility, data reporting workflows, and VAT tracking capabilities in light of the new requirements.
Our firm remains available to support clients in interpreting the directive, assessing integration readiness, and navigating compliance implications in a cost-effective and strategic manner.
For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices. You can also reach us via WhatsApp at +2348038460036.
