The Federal Inland Revenue Service (FIRS) is set to introduce one of the most transformative changes in Nigeria’s tax landscape. From July 2025, e-invoicing will be mandatory for all VAT-registered businesses engaging in B2B and B2G transactions. In addition, B2C sales exceeding ₦50,000 will also require real-time e-reporting.
This move is part of a broader effort to modernize tax compliance, streamline reporting, and reduce fraud through digital transformation.
This article explores the legislative framework, operational requirements, technical standards, and key compliance considerations behind Nigeria’s e-invoicing rollout, along with practical steps businesses should take to prepare.
Legal Foundations Driving Nigeria’s E-Invoicing Reforms
The primary legislative authority underpinning Nigeria’s e-invoicing system is the FIRS Establishment Act of 2007. Section 25 grants FIRS the power to administer all taxation laws and implement mechanisms for improved collection and oversight. Section 26 builds on this authority by allowing the deployment of technology to automate tax processes, assessments, and audits.
This legal basis has enabled the rollout of FIRSMBS, the Merchant Buyers’ Service Solution, which will serve as the national e-invoicing platform.
Complementing this is the National Information Technology Development Act of 2007, which empowers the National Information Technology Development Agency (NITDA) to regulate technology standards across sectors. NITDA has issued the 2024 Regulatory Guidelines for Electronic Invoicing, which define the data formatting rules, interoperability frameworks, and cybersecurity protocols that all e-invoicing systems must adhere to.
These legislative instruments form a robust framework for implementation, ensuring businesses are supported by clear, enforceable standards.
Scope and Requirements of Nigeria’s E-Invoicing Mandate
The mandate applies to all VAT-registered entities engaged in B2B, B2G, and high-value B2C transactions.
For B2B and B2G activity, a pre-clearance model will be adopted. Invoices must first be submitted to FIRSMBS for validation. Once approved, FIRS will issue a Cryptographic Stamp Identifier (CSID) and an Invoice Reference Number (IRN) within two to four hours. These validated invoices, which include a QR code for authentication, can then be sent to buyers through accredited Access Point Providers.
For B2C transactions exceeding ₦50,000, businesses are required to report invoice details to FIRSMBS within 24 hours of issuance. This near-real-time reporting framework ensures high-value retail transactions are captured promptly by the tax authority, supporting accurate VAT calculations and transparency.
Technical Specifications for E-Invoicing Compliance
To ensure compatibility across systems, Nigeria has adopted the BIS Billing 3.0 Universal Business Language (UBL) schema.
E-invoices must contain 55 mandatory fields across eight categories and can be submitted in either XML or JSON format to allow seamless system integration. Businesses must connect to FIRSMBS using RESTful APIs, which support the submission of invoices, retrieval of CSID/IRN statuses, and management of rejections in the case of validation errors. Digital certificates, issued by FIRS, are required for API authentication to safeguard invoice integrity.
Security is a key focus. All data stored within the system must be encrypted using AES-256 standards, while transmission must occur over TLS 1.3 encrypted channels. Additionally, access controls within companies must follow ISO 27001 standards to protect sensitive invoice data and restrict unauthorized access.
Accreditation, Compliance, and Penalties
To deliver compliant e-invoicing services, system integrators and Access Point Providers must be accredited by NITDA. Accreditation requirements include demonstrating technical competence, holding information security certifications such as ISO/IEC 27001, and, where relevant, Peppol Authority accreditation to enable cross-border interoperability. Providers must also prove they have the financial resources to maintain operational continuity and data security.
From the taxpayer’s side, there are strict rules for invoice storage and audit readiness. E-invoices must be securely stored for a minimum of 24 months, with clear audit trails maintained for user access and any data modifications.
Failure to comply with these rules can result in serious penalties. For instance, late reporting of B2C data will attract a fine of ₦50,000 per day. Non-compliant B2B and B2G invoices will be disallowed for VAT input claims, significantly impacting financial recoveries. Service providers that fail to meet NITDA’s standards may have their accreditation revoked following regular audits.
Implementation Timeline and Common Challenges
The implementation of e-invoicing in Nigeria will follow a phased approach.
- From July 1, 2025, large taxpayers will enter a pilot phase where compliance systems are stress-tested and refined.
- By January 1, 2026, medium and small enterprises will also be required to adopt the mandate.
This staggered timeline offers businesses a window to prepare and adjust systems and processes accordingly.
However, several challenges may affect implementation. Limited internet access in rural and remote areas can disrupt real-time reporting. Many companies may need to upgrade their ERP systems to meet the technical requirements of FIRSMBS. Awareness is also an issue.
In a recent survey conducted in Lagos, 68% of small businesses were unaware of the upcoming mandate. In response, FIRS has been hosting workshops and stakeholder forums to increase understanding and encourage proactive adoption. Cross-border complexity is another concern, though Nigeria’s alignment with Peppol standards will help reduce friction in invoice exchange between jurisdictions.
Looking Ahead: Regional Alignment and Innovation Potential
Nigeria’s e-invoicing strategy aligns with the African Continental Free Trade Area (AfCFTA) digital trade protocols. This harmonization could eventually enable standardized invoice data sharing and automate VAT refund processes for cross-border transactions across the continent.
Looking further ahead, there is potential for Nigeria to incorporate artificial intelligence and blockchain into its tax infrastructure. AI could support fraud detection by analysing invoice patterns and flagging anomalies, while blockchain could provide tamper-proof validation for transactions.
Final Thoughts
Nigeria’s move toward mandatory e-invoicing signals a major shift in how businesses interact with tax authorities. With clear legal backing, detailed technical specifications, and a roadmap for phased implementation, the country is well positioned to modernize its VAT collection and compliance processes.
However, successful adoption will depend on timely preparation, investment in compliant systems, and collaboration between government agencies and private sector stakeholders. For companies operating in Nigeria, the time to act is now. Early compliance will help avoid costly penalties, streamline internal processes, and position businesses to benefit from broader regional digital trade initiatives.
If your organization needs support navigating Nigeria’s e-invoicing mandate, eezi, powered by VAT IT, offers a fully compliant solution tailored to meet FIRSMBS requirements. Contact us today to ensure you’re ready for the July 2025 implementation date.
