Goodbye Paper, Hello Digital: What Nigeria’s E-Invoicing Framework Means for Businesses

Introduction

The Federal Inland Revenue Service (FIRS) has taken a bold step toward modernizing tax administration in Nigeria with the rollout of the National E-Invoicing Regime (“the Regime”), known as the Electronic Fiscal System (EFS) Merchant-Buyer Solution. This innovation is backed by the Nigeria Tax Act, 2025^[1], which gives the FIRS the authority to decide how invoices, returns, and other tax documents should be prepared and submitted.

But what does this mean for you as a business owner or taxpayer? Let’s break it down.

The Big Switch: When Did It Start?

The E-invoicing System (EFS) commenced on 1 August 2025, following the conclusion of the pilot phase that began in November 2024. With effect from 1 November 2025, all businesses classified as Large Taxpayers (those with an annual turnover of 5 billion Naira or more) by FIRS, are required to issue invoices electronically.

For compliance, an electronic invoice must be generated in a FIRS-approved system and transmitted to the FIRS EFS portal, where it is officially recorded. Invoices not processed through this system will not be recognized as compliant under the EFS framework. The deadline for compliance was extended to 1 November 2025 to accommodate operational adjustments by affected taxpayers.

Who does this apply to?

It is important to note that the EFS applies to all registered businesses and entities conducting transactions in or from Nigeria. While the FIRS places particular emphasis on Large Taxpayers, defined as companies with an annual turnover of ₦5 billion and above, compliance is not restricted to this category. All businesses, regardless of size, are required to adopt the EFS framework.

How does it work? 

Once an invoice is created, whether through a company’s integrated system or an APP-provided platform, it is automatically sent to FIRS for validation. The FIRS system reviews the details and then assigns three identifiers that make the invoice legally valid for payment and tax purposes: an Invoice Reference Number (IRN), a Quick Response (QR) code for instant verification, and a digital signature confirming the invoice’s authenticity. Any invoice that does not include these identifiers will not be recognised as compliant under the EFS.

Steps for Compliance:

Transitioning to e-invoicing requires preparation across systems, processes, and people. The following steps can help businesses stay compliant:

• All taxpayers must register on the FIRS e-Invoicing System portal before issuing compliant e-invoices. Registration grants access to official documentation, integration guidelines, and regular updates on compliance timelines.
• Evaluate your existing accounting or enterprise resource planning (ERP) software to determine whether it can generate e-invoices in the format required by the FIRS; if it cannot, upgrade your system or adopt a solution that supports direct integration with the EFS.
• If internal integration is not feasible, businesses should engage a licensed System Integrator (SI) or Access Point Provider (APP). The SI will configure your accounting or invoicing software to align with FIRS data and technical standards, while the APP provides the secure digital channel that validates and transmits invoices between your business and the FIRS platform.
• Companies should also prepare for pilot testing, as certain sectors may be required to participate in a trial phase prior to full implementation. This trial phase allows businesses to familiarize themselves with the system and ensures that the E-invoicing process operates correctly before it becomes mandatory.
• Companies must monitor compliance deadlines, as FIRS has set November 1, 2025, as the mandatory date for full adoption of the E-invoicing System. Failure to comply by this date may attract penalties under the relevant regulations.
• Finally, seek advice from tax professionals who can guide you through both the technical setup and the legal requirements.

Penalties for non-compliance

• If a taxpayer does not allow FIRS to deploy the required system within 30 days of notice, a penalty of ₦1,000,000 applies on day one and ₦10,000 for each day after until full compliance.
• Where a business fails to process taxable transactions through the EFS, a penalty of ₦200,000 applies, plus 100% of the tax due, and interest at the prevailing Central Bank of Nigeria (CBN) Monetary Policy Rate.

Conclusion

The EFS has progressed from its pilot phase into the initial stage of mandatory compliance for large taxpayers, with full implementation expected by November 2025. This transition signals the FIRS’ commitment to building a transparent, technology-driven tax environment that ensures every transaction is traceable and verifiable in real time.

Beyond mere digitization, the goal of the e-invoicing regime is to strengthen tax integrity, close revenue leakages, and simplify compliance through automation. For businesses, this shift represents both a regulatory requirement and an opportunity to modernize internal accounting systems, reduce manual errors, and align with global best practices in fiscal reporting. The true measure of success will depend on how effectively taxpayers adapt to the new framework and how consistently the FIRS provides the support and infrastructure needed to sustain it.

This article is intended to provide general information on the subject matter and does not, by itself, create a client-attorney relationship between readers and Hamu Legal, nor does it serve as professional legal advice.

We are available to provide specialist legal advice on the readers’ specific circumstances when they arise. For further enquiries, please reach out to Cosec @hamulegal.com or yewande@hamulegal.com.