FIRS plans to unveil e-invoice, facilitate real-time transaction validation, storage, others
Federal Inland Revenue Service (FIRS), has declared that it plans to introduce e-invoice, a digital solution for managing invoices to facilitate real-time transaction validation and storage, benefiting Business-to-Business, Business-to-Consumer, and Business-to-Government transactions.
Executive Chairman, FIRS, Dr. Zacch Adedeji, made this disclosure while speaking at the LCCI -FIRS Private Sector Stakeholders ‘engagement with theme, ‘Emerging tax matters’, organised by Lagos Chambers of Commerce and Industry, adding that the digital solution will be in line with the Tax Administration and Enforcement Act 2007.
Dr. Adedeji, was represented by Acting Director, Medium Taxpayers Department, Medium Taxpayers Department, Mrs. Oti Olaniyi, further said that the emerging tax matters in Nigeria present both challenges and opportunities.
“By embracing reform, leveraging technology, and ensuring transparency, we can develop a tax system that supports sustainable growth and equitable development. Our collective efforts will pave the way for a more prosperous and resilient Nigeria. As we move forward, we must continue to innovate and enhance our tax system.
“As we navigate the complexities of our globalized economy, it is crucial to understand the evolving landscape of taxation and its implications for our country’s growth and development.
“It’s essential to recognize the vital role that taxpayers play in a country’s economic development. They are instrumental in financing the infrastructure projects that are critical to our progress at all levels of government. Our agency is tasked with the collection, assessment, accounting and enforcement of various taxes, including Corporate Income Tax (CIT), Value Added Tax (VAT), Petroleum Profit Tax (PPT), Capital Gains Tax (CGT), and Education Tax (EDT), among others. These revenues are deposited into the Federation Account and are distributed monthly to the three tiers of government according to a set formula. Additionally, Value Added Tax (VAT) follows a distinct sharing ratio: 15% to the Federal Government, 50% to the States, and 35% to the Local Governments,” the FIRS boss emphasized.
He explained that on assumptions of office, he saw the need to unveil a new FIRS which intends to drive the customer focus service delivery based on people, technology and process as well as harmonized tax services.
“This reorganization represents a strategic shift towards attaining a customer-centric organizational structure aiming to systematically address challenges and ensure pragmatic reforms applicable to the Service’s complex realities.
“By streamlining operations and decentralizing key functions, the FIRS aims to address long-standing challenges and improve its responsiveness to taxpayer needs. This restructuring is not just an administrative change; it’s a step towards creating a more agile and accountable institution that can better support Nigeria’s economic growth and development.
“Some of our achievements are creation of three operational groups from the previous General Tax Operation Group (GTOG) – Small (Emerging Tax), Medium and Large Tax Groups to better cater for taxpayer needs according to their income threshold. Creation of One-Stop-Shop: Both Tax Office and Tax Audit functions within an Integrated Department, as well ensuring that matters relating to all taxes are handled in the tax office (no more VAT Coordination, Stamp Duty Office etc) to forestall harassment of taxpayers by multiple function.
“The FIRS is committed to a customer-centric approach aimed at enhancing voluntary compliance and boosting revenue generation. Ensuring tax compliance benefits both businesses and the government. When businesses meet their tax obligations, it translates into increased revenue for the government, which is essential for funding public services and infrastructure development, ultimately driving economic growth and societal well-being.
“Another key area of reform involves leveraging technology to strengthen tax administration. The FIRS has developed a platform called Taxpro Max, which allows taxpayers to file returns and access various tax services online. Our suite of e-services—including e-filing, e-reporting, e-registration, and e-TCC—demonstrates our commitment to facilitating easy and efficient tax management. Additionally, we have established a robust data management division to ensure accurate assessments and strategic planning, leveraging data analytics to enhance our tax administration.
“Tax education and public awareness are vital for fostering a culture of tax compliance. Taxpayer education campaigns help citizens understand their tax obligations and the benefits of tax revenue. Initiatives like our monthly Tax Thursdays and sensitization exercises in schools aim to enhance public understanding of tax. Furthermore, our newly established contact centre ensures that taxpayer inquiries and complaints are addressed promptly, within 48 hours,” the FIRS boss added.
Nigeria, he said, is at a crucial juncture in its economic evolution.
According to Dr. Adedeji, “Our tax system, a foundational element of economic policy, is undergoing significant reforms. These changes are driven by the need for increased revenue, better compliance, and more equitable economic practices. These reforms are essential to meet with emerging tax issues and also commensurate with the fiscal tax reforms being handled by the Presidential Fiscal Policy and Tax Reforms Committee. Historically, our tax revenue has not kept pace with the needs of our expanding population and infrastructure demands. Our heavy reliance on oil revenues has highlighted the need for diversification. Thus, modernizing our tax system to address current economic challenges is crucial.
“The recent changes in the tax landscape are designed to simplify the tax system, broaden the tax base, and ensure a fairer distribution of tax responsibilities. The key reforms include, the rise of the digital economy presents a significant challenge to traditional tax frameworks. To address this, Nigeria has implemented new tax policies targeting digital platforms, including the Finance Act’s provisions on VAT for digital services. This is a crucial step in ensuring that global tech companies and entities which provide services to remotely contribute fairly to our economy.
“The Withholding Tax (WHT) was designed to provide government with regular revenue flow and serve as a means of cutting tax evasion. However, over the years as the regime expanded with more transactions, various ambiguities and complications crept in. To address these complexities in the 2024 Regulation, is the introduction of a simplified and business friendly tax regime on advanced payment of tax on specified transaction. Specifically, the changes includes exemption of small businesses from withholding tax compliance, reduced rates for businesses with low margin, exemptions for manufacturers and producers in farming and other measures to curb evasions and minimize tax avoidance.
“Tax incentives are crucial for encouraging investment and economic growth. Nigeria has introduced several incentives to attract foreign investment and support local industries. For instance, the Ministry of Finance (MoF) released a Circular on fiscal incentives for the gas sector. This Circular is in line with the Presidential Gas for Growth Initiative which aims to improve the investment climate in Nigeria and to increase the utilisation and supply of gas in the domestic market. To this end, a zero percent VAT rate is now applied on Feed Gas for all processed gas, Compressed Natural Gas (CNG), Imported Liquefied petroleum gas (LPG), LPG and CNG equipment components, conversion and installation services and all equipment relating to the expansion of CNG and LPG, including conversion kits.
“As we explore various tax incentives to stimulate local industries, we must emphasize the need for transparency and effectiveness in the implementation of these incentives. Evaluating their impact and ensuring they align with national development goals is critical for maximizing their benefits.
“The informal sector, which constitutes a large part of our economy, poses unique challenges. Many small and micro businesses operate outside the formal tax system. To engage this sector effectively, the government is exploring simplified tax regimes and registration incentives. The recent restructuring of the FIRS into three operational groups—Small/Emerging Taxpayers, Medium Taxpayers, and Large Taxpayers—allows for a more focused approach in managing and supporting different segments of taxpayers.
“As we move forward, we encourage you to support these initiatives with constructive feedback and collaboration. By doing so, we can all build a stronger, more resilient economy that benefits everyone. We look forward to our continued collaboration in advancing Nigeria’s tax system for the benefit of all its citizens,” he stressed.
