FIRS Extends Deadline for Transition to E-Invoicing by Three Months

The Federal Inland Revenue Service (FIRS) has extended the deadline for taxpayers to transition to its new electronic invoicing system by an additional three months, giving businesses more time to adjust to the platform aimed at improving tax compliance and reducing revenue leakages.

The extension, announced on Tuesday in Abuja, moves the compliance deadline from September 1, 2025, to December 1, 2025. FIRS Chairman, Zacch Adedeji, said the decision was in response to appeals from the business community and industry groups who requested more time to fully integrate the e-invoicing system into their accounting and payment processes.

Adedeji explained that the e-invoicing platform is part of the government’s broader digital tax administration reforms, designed to ensure transparency, curb fraud, and improve efficiency in the nation’s tax collection process. Under the system, all Value Added Tax (VAT)-registered businesses are required to generate and submit invoices electronically to FIRS in real time, enabling the agency to verify transactions instantly.

According to him, the implementation of e-invoicing is crucial to closing gaps in VAT and corporate income tax collection, as it will help reduce instances of underreporting and falsification of sales records. “E-invoicing is not just a tool for compliance; it is a tool for transparency and fairness in our tax system. With this system, we can ensure that businesses remit the correct amount of tax, while also simplifying reporting for taxpayers,” Adedeji stated.

He noted that while the majority of large corporations and multinational companies have already started integrating the system, many small and medium enterprises (SMEs) still face challenges, particularly in terms of technology adoption, internet connectivity, and training. This, he said, informed the decision to grant a three-month grace period, during which FIRS will intensify stakeholder engagement, provide free training sessions, and offer technical support to facilitate smooth adoption.

The FIRS chairman urged businesses to use the extension wisely, warning that there would be no further delays in enforcement after December 1. From that date, non-compliant companies will face penalties, including fines and possible suspension of VAT registration, until they comply.

Industry stakeholders have generally welcomed the extension, saying it will allow more businesses to comply without disrupting operations. The Lagos Chamber of Commerce and Industry (LCCI) praised FIRS for listening to the concerns of the private sector. LCCI President, Gabriel Idahosa, said while the e-invoicing system has clear benefits, a rushed implementation could have created operational bottlenecks for many businesses, especially smaller ones. “This extension will help companies upgrade their systems, train their staff, and test the new process before full compliance becomes mandatory,” Idahosa said.

Similarly, the Manufacturers Association of Nigeria (MAN) described the grace period as a “practical and considerate decision.” MAN’s Director-General, Segun Ajayi-Kadir, stressed that manufacturers were not opposed to the reform but had raised concerns about the initial timeline, given the scale of system upgrades and staff retraining required. He urged FIRS to continue engaging with the private sector to ensure a smooth transition that minimises disruptions to production and supply chains.

Tax experts say e-invoicing has been successfully implemented in several countries, including Kenya, South Africa, and Brazil, with significant improvements in tax revenue collection and compliance levels. They believe Nigeria’s adoption will have similar benefits, provided it is implemented with adequate stakeholder support and technical infrastructure.

However, some analysts warn that the effectiveness of the system will depend on how well FIRS addresses issues such as internet access in rural areas, digital literacy among small business owners, and cybersecurity risks. “The e-invoicing platform will handle vast amounts of sensitive financial data. Ensuring robust data protection measures will be critical to building trust among taxpayers,” said Dr. Adaobi Nwosu, a taxation lecturer at the University of Lagos.

FIRS has assured the public that the e-invoicing system is secure, with multiple encryption layers and real-time monitoring to detect suspicious transactions. The agency also stated that the platform will integrate seamlessly with most enterprise resource planning (ERP) software and point-of-sale (POS) systems, allowing businesses to automate compliance without manual intervention.

The transition to e-invoicing is part of Nigeria’s ongoing efforts to modernise its tax administration and expand its revenue base in line with the government’s fiscal sustainability goals. It comes alongside other digital initiatives, including the TaxPro-Max platform for online filing and payment, as well as plans to implement electronic fiscal devices for cash-based businesses.

With Nigeria aiming to increase its tax-to-GDP ratio from the current 10.9 percent to at least 18 percent over the next four years, the government views technological innovation as essential to plugging revenue leakages and improving efficiency.

As the December deadline approaches, FIRS has called on all businesses to prioritise compliance, noting that the grace period should not be mistaken for a suspension of the policy. Adedeji concluded: “We are giving this time because we want a smooth transition, not because we are stepping back from reform. From December 1, 2025, the rules will apply fully, and enforcement will be strict. We urge all taxpayers to make the most of this window.”

If the rollout proceeds as planned, Nigeria’s e-invoicing system could represent a major shift in tax compliance, offering a more transparent and efficient process that benefits both the government and compliant businesses.