Introduction
In November 2024, the Federal Inland Revenue Service (FIRS) announced the planned adoption of the Merchant Buyer Solution (MBS) also called the e-invoicing initiative for enhanced tax administration and tax collection. This is a national initiative involving various government agencies, such as the Nigeria Customs Service (NCS), Central Bank of Nigeria (CBN), National Information Technology Development Agency (NITDA), etc., but is primarily driven by the FIRS. Electronic invoicing is simply a process of sending and receiving invoices electronically rather than through paper-based methods.
Nigeria will be adopting the clearance and reporting model of e-invoicing in line with the Pan-European Public Procurement Online (PEPPOL) framework. This model of e-invoicing is used for Business-to-Business (B2B) and Business-to-Government (B2G) transactions. The clearance model facilitates seamless creation, validation, and exchange of electronic invoices between transacting parties. Under this model, each invoice generated by taxpayers must include an invoice reference number (IRN), Quick Response (QR) code, and a digital signature to be considered valid for payment. The e-invoicing system automatically generates the IRN. For Business-to-Consumer transactions (B2C), FIRS is likely to adopt a simplified invoice/fiscalisation method that will involve real-time or near real-time transmission of transaction data. E-Invoices can be issued and processed in all currencies.
The FIRS is currently pilot testing this initiative with selected large taxpayers. Full-scale deployment is expected to begin in July 2025 but may be delayed if the President has not assented to the Tax Reform Bills by then. Roll-out will begin with large taxpayers, focusing on B2B and B2G transactions, and thereafter, B2C transactions. This phased approach allows for careful monitoring and troubleshooting of taxpayer’s system before it is expanded to the broader consumer base.
A typical e-invoice will include eighty (80) fields (both mandatory and optional fields), some of which are already present in taxpayers’ Enterprise Resource Planning (ERP) systems and existing e-invoicing solutions. The remaining fields would need to be configured by a System Integrator (SI). The SI guarantees data compatibility in line with Universal Business Language (UBL) and facilitates accurate transmission of invoices to the Access Point Provider (APP). The APP, on the other hand, validates and securely transmits invoices from the client’s invoicing solution to the FIRS’s MBS solution. Taxpayers have the flexibility to choose from a list of licensed APPs and SIs for support in transmitting e-invoices between trading partners and the FIRS. They also have the option to become SIs or APPs themselves, provided they meet the necessary requirements. Please see the link to the requirements.
The FIRS has conducted several stakeholders’ engagement sessions, including sector-specific sessions to educate stakeholders and encourage their active participation in e-invoicing.
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