FIRS to introduce electronic invoice to improve tax system

The Federal Inland Revenue Service (FIRS) says it will introduce an electronic invoice (e-invoice) to improve the tax system in Nigeria.

Zacchaeus Adedeji, executive chairman, FIRS, spoke on Wednesday in Lagos during an engagement with the organised private sector on ‘Emerging Tax Matters’.

Adedeji was represented by Oti Olaniyi, acting director of the medium taxpayers department at the FIRS.

“The e-invoice was necessary as the country moved forward to innovate and enhance its tax system”, Adedeji said.

Adedeji said the initiative, a digital solution for managing invoices, is in line with the Tax Administration and Enforcement Act 2007.

The taxman said it is also part of the FIRS’s digital transformation strategy and would facilitate real-time transaction validation and storage — benefiting business-to-business, business-to-consumer, and business-to-government transactions.

He said the emerging tax matters in Nigeria present both challenges and opportunities.

“Our collective efforts will pave the way for a more prosperous and resilient Nigeria,” Adedeji said.

“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.”

Adedeji said Nigeria could develop a tax system to support sustainable growth and equitable development by embracing reforms, leveraging technology, and ensuring transparency.

He said the country has gotten to a crucial juncture in its economic evolution and must explore various tax incentives to stimulate local industries.

The FIRS chairman added that the informal sector, which constitutes a large part of the economy, posed unique challenges as many small and micro businesses operated outside the formal tax system.

He said to engage the sector effectively, the government would explore simplified tax regimes and registration incentives.

LCCI CALLS FOR PARTNERSHIP TO ENSURE TAX POLICIES SUPPORT BUSINESSES

In his remarks, Gabriel Idahosa, president of Lagos Chamber of Commerce and Industry (LCCI), urged the FIRS to collaborate with the private sector and government to ensure that tax policies support business innovation and competitiveness.

Speaking on reforms, Idahosa said Nigeria’s tax system had undergone significant transformations driven by reforms and policy changes to boost revenue, simplify compliance, and address critical fiscal challenges.

He said under its new leadership, the FIRS had set ambitious goals to increase tax collection by 57 percent, targeting a revenue of N19.4 trillion for 2024.

Idahosa said though the country’s current tax-to-gross domestic product (GDP) ratio stood at 10.86 percent, the government aimed to achieve a tax-to-GDP ratio of 18 percent within the next three years through newly introduced tax reforms.

According to the LCCI president, reaching the goal would require concerted effort from both the public and private sectors, along with targeted reforms aimed at simplifying tax policies and encouraging compliance.

“There is also a growing need for collaboration between the private sector and the government to ensure that tax policies support business innovation and competitiveness,” Idahosa said.

“For instance, recommending tax breaks for wage increases and removing barriers to foreign currency-denominated transactions can create a more robust investment environment.

“As we move forward in 2024, Nigeria’s fiscal policy is at a critical juncture; the drive to expand the tax net, streamline the system and boost compliance is essential for securing Nigeria’s economic future.”

Idahosa said for the reforms to succeed, the government must foster trust through transparency and fairness, while businesses and citizens must embrace a culture of tax compliance.