E-Tranzact and FIRS e-Invoicing

The Federal Inland Revenue Service (FIRS) has taken another bold step in Nigeria’s tax reform
agenda with the rollout of e-invoicing and the Electronic Fiscal System (EFS). At the heart of
this new process is E-Tranzact, Nigeria’s pioneering switching and payments company, which
has been tapped to play a central role in powering the technology.
For corporate taxpayers, especially large companies with a turnover of ₦5 billion or more, this is
more than just a compliance requirement. It is the beginning of a new era of real-time tax
monitoring that will reshape how businesses handle accounting, compliance, and reporting.
Why E-Invoicing, Why Now?
Nigeria’s tax-to-GDP ratio has long lagged behind peers in Africa. Despite being the continent’s
largest economy, tax revenue has hovered between 6% and 8% of GDP, compared to South
Africa’s 25%. The result is a persistent gap between government revenue needs and actual
collections.
E-invoicing offers a digital solution to an age-old problem. By linking every large taxpayer’s
invoicing system directly to FIRS, the government can:
● Close revenue leakages by monitoring transactions in real time
● Reduce tax evasion and underreporting.
● Standardise invoicing practices across industries
● Strengthen Nigeria’s credibility in the global fight against Base Erosion and Profit
Shifting (BEPS)

For the private sector, this reform represents a decisive shift toward transparency and
accountability.
Who Is E-Tranzact, and Why Them?
Founded in 2003, E-Tranzact is Nigeria’s first licensed switching and transaction processing
company. Over the years, it has grown into a fintech giant, enabling payments across mobile,
POS, ATMs, and online platforms. With its robust infrastructure, regulatory licensing, and deep

integration in Nigeria’s financial ecosystem, it is uniquely positioned to support the massive
data processing and security requirements of the FIRS e-invoicing system.
Their involvement signals FIRS’s intent to outsource the backbone of this reform to trusted
private-sector players who understand both technology and compliance. For taxpayers, this
should provide some comfort that the system will be handled by a company with proven
reliability.
What Corporate Taxpayers Should Expect
If you are a corporate taxpayer, here’s what this transition means for your operations:
1. Mandatory Onboarding
Large taxpayers must integrate their ERP or accounting systems with FIRS’s platform through
accredited service providers. Failure to onboard before the November 1, 2025 deadline could
result in penalties or disrupted tax recognition.
2. Real-Time Invoice Validation
Invoices not transmitted and validated through the platform will not be recognised for tax
purposes. This affects VAT input claims, expense deductions, and even contract executions with
government agencies.
3. Higher Compliance Costs
Companies may need to upgrade IT systems, retrain staff, and possibly engage third-party
integrators. For multinationals and conglomerates with complex supply chains, this could mean
significant reconfiguration of existing processes.
4. Less Flexibility in Reporting
Once every invoice is tagged with a unique identifier and transmitted, there is no room for
“back-dating” or “adjusting” numbers after year-end. Financial reports will more closely mirror
real-time business activity.
Potential Benefits for Businesses
While many corporates may initially view this as another regulatory hurdle, there are long-term
gains:

● Audit Efficiency: Disputes with FIRS over invoices or deductions will reduce since
invoices are pre-validated.
● Operational Transparency: Businesses can track invoice flows more efficiently,
reducing fraud and leakages.
● Investor Confidence: Global investors value transparency. Multinationals operating in
Nigeria will find it easier to justify their tax compliance to parent companies and
regulators abroad.
● Level Playing Field: Companies that have always complied will no longer be undercut
by those who manipulate invoices.

Challenges and Risks Ahead
No reform comes without its challenges. Corporate taxpayers should prepare for:
● Integration Bottlenecks: Many large taxpayers have yet to complete onboarding,
raising concerns of a last-minute rush.
● Data Security: Sensitive financial data will now move directly between corporate
systems and FIRS. Ensuring encryption and compliance with the Nigeria Data Protection
Act will be crucial.
● Operational Disruptions: Downtime in the e-invoicing system could delay transactions
and business operations.
● Resistance to Change: Businesses used to flexible reporting may resist stricter
compliance, but penalties are expected to be steep.

Wider Implications for Corporate Governance
Beyond tax compliance, e-invoicing represents a corporate governance milestone. Boards
and CFOs will need to:
● Strengthen oversight over financial reporting systems
● Align internal controls with real-time reporting requirements
● Ensure cross-departmental collaboration between finance, IT, and compliance teams

● Prepare for more data-driven audits not just from FIRS, but also from investors and
regulators

In essence, companies will have to treat tax compliance as a strategic function rather than a
year-end exercise.
How to Prepare Your Business
Here are practical steps for companies:
1. Engage IT and Finance Teams Early: Ensure systems can generate and transmit
compliant invoices.
2. Work with Accredited Service Providers: Whether E-Tranzact or others, ensure your
integrator is recognised by FIRS.
3. Update Compliance Policies: Reflect the new invoicing requirements in internal
documentation and controls.
4. Train Staff Across Functions: Finance, sales, and procurement staff must understand
how invoicing changes affect their roles.
5. Communicate with Partners: Suppliers and customers should also align with compliant
invoicing standards to avoid transaction bottlenecks.

Conclusion: A Turning Point for Corporate Taxation in Nigeria
The partnership between FIRS and E-Tranzact is more than a tech upgrade—it is a paradigm
shift in Nigeria’s tax administration. For corporate taxpayers, the message is clear: tax
transparency is no longer optional; it is embedded in every invoice you issue.
Yes, the transition may feel demanding, but in the long run, it could simplify audits, enhance
investor trust, and level the business playing field.
For now, the most important question corporate leaders should be asking is
“Is our business truly ready for a world where every invoice speaks directly to the tax

To know more about E-Tranzact and FIRS e-Invoicing, kindly contact us at :

E-mail: care@sowprofessional.com

Website: www.sowprofessional.com

Phone: 07038254989

Whassapp: 07038254989

authority?”