Nigeria – Implementation of Mandatory B2B, B2C and B2G E-invoicing

October 1, 2024

The Nigerian governing body for tax-related issues, including the Value Added Tax (VAT), Federal Inland Revenue Service (FIRS), announced that, as part of the process of modernizing and improving the Nigerian tax system and its administration and compliance, it plans to implement mandatory B2B, B2C, and B2G e-invoicing.

FIRS developed a plan for digital transformation that includes real-time validation and storage of all B2B, B2C, and B2G transactions.

Current E-invoicing Rules and Future Developments

Under the current rules in place in Nigeria, e-invoices regarding import and export transactions are submitted to the Central Bank of Nigeria (CBN) through a portal dedicated to these purposes. However, as stated in the government initiative to further improve the country's tax system, an online digital solution for e-invoicing will be introduced.

Unfortunately, the timeline and deadlines for implementing the new FIRS system for mandatory B2B, B2C, and B2G E-invoicing, as well as any other technical details, are still being determined and will be published in the future.

Still, FIRS has already launched the FIRSMBS initiative, which provides comprehensive guidance to all concerned parties and stakeholders about e-invoicing, its benefits, and its scope.

Based on the information provided, current rules state that e-invoices contain all important information about suppliers and buyers, supplied goods and services, and VAT amounts, such as data on quantities, prices, and VAT. Supported formats are XML and JSON, and two e-invoice transmission models exist: the first utilizes the FIRSMBS Portal hosted by the FIRS, and the second uses the FIRSMBS eInvoice API.

Furthermore, all invoices must have an Invoice Reference Number (IRN) and be reported within 21 days of the invoice date.

Conclusion

Some expect mandatory B2B, B2C, and B2G e-invoicing rules to be in place in 2025. The Nigerian government is eager to introduce digital reporting as soon as possible, as it wants to increase tax collection and further implement monitoring tools to ensure an even higher level of transparency and compliance with VAT legislation. Consequently, this should increase the government budget and reduce tax and VAT evasion.

Source: Sovos, Federal Inland Revenue Service

What is the purpose of implementing mandatory e-invoicing in Nigeria?

The Federal Inland Revenue Service (FIRS) aims to modernize and enhance the Nigerian tax system by introducing mandatory e-invoicing for B2B, B2C, and B2G transactions. This initiative seeks to improve tax administration and compliance, ensuring real-time validation and storage of transactions.

Which transactions are affected by the mandatory e-invoicing requirement?

The mandatory e-invoicing requirement applies to all Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Government (B2G) transactions within Nigeria.

What are the current e-invoicing procedures for import and export transactions?

Currently, e-invoices for import and export transactions are submitted to the Central Bank of Nigeria (CBN) through a dedicated portal.

What information must be included in an e-invoice under the new system?

E-invoices must contain detailed information about suppliers and buyers, the goods and services provided, and applicable VAT amounts. This includes data on quantities, prices, and VAT.

What are the acceptable formats for e-invoices, and how should they be transmitted?

The supported formats for e-invoices are XML and JSON. There are two transmission models: using the FIRSMBS Portal hosted by FIRS or utilizing the FIRSMBS eInvoice API.

Is there a deadline for reporting invoices under the new e-invoicing system?

All invoices must have an Invoice Reference Number (IRN) and be reported within 21 days of the invoice date.

VAT