The Federal Inland Revenue Service (FIRS) has unveiled plans to introduce a digital e-Invoice solution aimed at improving tax administration and enhancing compliance across Nigeria.
This initiative is part of FIRS’ ongoing digital transformation efforts to modernize the country’s tax system.
The announcement was made by the Executive Chairman of FIRS, Dr. Zacchaeus Adedeji, on Wednesday during the “Emerging Tax Matters” stakeholders’ engagement organized by the Lagos Chamber of Commerce and Industry (LCCI) in collaboration with FIRS. Represented by Mrs. Oti Olaniyi, Acting Director of the Medium Taxpayers Department, Adedeji highlighted that the e-Invoice system would enable real-time validation of transactions across various sectors, including business-to-business, business-to-consumer, and business-to-government exchanges.
Modernizing Tax Systems with E-Invoice
The FIRS e-Invoice is expected to ensure transparency and efficiency in tax processing. By facilitating the digital exchange of transaction data between buyers and suppliers, the e-Invoice will automate tax reporting processes and minimize errors in documentation.
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Adedeji emphasized the importance of leveraging technology to create a sustainable and equitable tax system, noting that the evolving tax environment in Nigeria presents both challenges and opportunities. “Our collective efforts will pave the way for a more prosperous and resilient Nigeria. As we move forward, we encourage you to support these initiatives with constructive feedback and collaboration,” he said.
Tax Reforms and Incentives
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The FIRS Chairman also discussed the agency’s recent restructuring and various tax reforms aimed at supporting local industries and stimulating sustainable growth. He stressed the importance of transparency in providing tax incentives, ensuring they align with Nigeria’s broader development goals. Adedeji acknowledged the significant challenges posed by the informal sector, which accounts for a substantial portion of Nigeria’s economy, and outlined plans to introduce simplified tax regimes to encourage small and micro-businesses to join the formal tax system.
Private Sector Collaboration
LCCI President, Mr. Gabriel Idahosa, commended FIRS for its ongoing reforms and called for greater collaboration between the public and private sectors to achieve the country’s revenue targets. He noted that under the leadership of Dr. Adedeji, FIRS has set an ambitious goal to increase tax collection by 57%, aiming to generate N19.4 trillion in 2024.
Idahosa also recommended reforms to support business innovation and competitiveness, including tax breaks for wage increases and easing restrictions on foreign currency transactions. He emphasized the need for transparency and trust in the tax system to encourage compliance from both businesses and individuals.
FIRS Revenue Targets
Despite these efforts, the FIRS has struggled to meet its 2024 tax collection targets, particularly from oil sector revenues. Between January and April 2024, the agency collected N1.63 trillion from oil taxes, falling short of the approved target of N3.32 trillion by N1.69 trillion. This is just 49% of the projected revenue for the period.
However, FIRS remains focused on its internal revenue goal of N7.5 trillion for 2024, continuing its efforts to drive compliance and optimize tax collection through digital innovations like the e-Invoice system.