Many large businesses risk sanctions if they fail to connect their invoicing systems to the Nigerian Revenue Service’s electronic invoicing platform by the end of June, as authorities push ahead with a reform that will give tax officials near real-time visibility into company transactions.

The e-invoicing system requires businesses to generate invoices digitally and transmit them to the National Revenue Service (NRS) in real time or near real time before or as they are issued to customers.

Each invoice is authenticated through the platform, creating a digital trail that allows tax authorities to track sales, validate transactions, and match them with tax filings.

Speaking during a webinar hosted by Stransact and Doftwerks West Africa Limited, Mohammed Bawa, head of product management at the NRS, said large taxpayers that fail to begin transmission by the deadline would be treated as defaulters under the rollout timetable.

“It simply means that the NRS, by then, has the mandate to apply sanctions for non-compliance,” Bawa said, noting that timelines could still be reviewed depending on implementation progress and challenges faced by taxpayers.

The June deadline marks a major compliance test for companies with annual turnover above N5 billion, which are expected to complete integration and begin transmitting invoices under the new regime, a shift that could permanently alter how businesses record sales, report taxes, and manage their accounting systems.

Before the introduction of the Merchant Buyer Solution (MBS), companies filed value-added tax (VAT) returns monthly through TaxPro Max, with invoices largely unverified at the point of issuance.

Tax reporting depended on self-declaration, with underreporting typically detected only during periodic audits conducted months after transactions occurred. The MBS system does not replace TaxPro Max but sits on top of it as a real-time verification layer, shifting compliance from post-transaction reconciliation to continuous monitoring.

The rollout signals a broader shift in Nigeria’s tax administration from self-reported filings to data-verified compliance, with authorities seeking direct digital visibility into invoices as they are generated.

For businesses, this means e-invoicing is no longer just a tax obligation but an operational requirement, demanding compatible accounting systems, tighter record-keeping, and faster response to compliance demands.

Under the current framework, companies with an annual turnover of N5 billion or more, estimated at 5,000 large taxpayers nationwide, are required to adopt the platform.

Within weeks of the rollout, roughly 1,000 firms, representing about 20 per cent of eligible taxpayers, had commenced integration, according to official data. Early adopters include MTN Nigeria, IHS, and Huawei Nigeria.

Although initially limited to large taxpayers, policymakers view the MBS e-invoicing system as a pilot for broader adoption across other taxpayer segments, positioning digital invoicing as a central pillar of Nigeria’s tax modernisation drive.

For medium-sized businesses with turnover between N1 billion and N5 billion, the engagement phase is ongoing and expected to run through March 2026. This group is scheduled to enter a pilot phase in the second quarter of the year, with a formal go-live date of July 1, 2026, and enforcement beginning in January 2027.

The government has provided smaller businesses with a longer transition window, allowing them to adapt to the new tax system. Their engagement phase is set to begin in January 2027, with a full rollout planned for July 2027 and enforcement expected from early 2028.

Nigeria’s move mirrors a broader global shift in tax administration, where electronic invoicing is no longer a simple PDF exchange but a system of structured digital data transmitted directly between businesses and tax authorities.

In regions such as Europe and Latin America, invoices are generated in machine-readable formats like XML or Universal Business Language (UBL), allowing automatic validation and secure transmission through government platforms or networks such as Peppol.

Countries including Italy, Brazil and Mexico already operate real-time clearance systems, where invoices must be approved by tax authorities before transactions are completed.

Analysts say the reform could significantly improve tax transparency and reduce revenue leakages, but warn that compliance costs and system readiness remain key concerns for many firms.

“Efficiency is the obvious benefit. But the deeper impact is assurance. Continuous validation strengthens governance, enhances investor confidence, and aligns Nigeria’s reporting standards with global best practice,” said Oluyemisi Daramola, partner at Bamidele Daramola & Co.

While authorities say the system will improve transparency and reduce the need for repeated audits, businesses have raised concerns over data privacy, system reliability, and the risk of increased scrutiny as more financial information becomes visible to regulators.

“There are legitimate fears from data security to how much visibility the authorities will have over transactions,” said Eben Joels, managing partner, Stransact, reflecting concerns among business owners about the implications of real-time reporting.

Officials, however, argue that the system is designed to reduce friction between taxpayers and regulators by ensuring both parties have access to the same data, limiting the need for intrusive audits and disputes.

The success of the rollout, however, will depend on how effectively authorities balance enforcement with support for businesses still adapting to the new system, as Nigeria moves toward a more data-driven tax regime. (BusinessDay)

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