When Nigeria launched the e-invoice system as part of its fiscalisation framework, most attention focused on compliance enforcement. The Federal Inland Revenue Service (FIRS) can now monitor transactions in real time and curb revenue leakages. Yet the system also carries a transformative potential: passive tax inclusion.
The Visibility Problem in Nigeria’s Informal Economy
For decades, tax administration in Nigeria struggled with the opacity of the informal sector. Millions of micro and small enterprises transact daily without receipts or reporting. Traditional enforcement methods like audits and field drives proved costly and often adversarial.
The e-invoice solution changes this dynamic. Every time a business issues an electronic invoice, the data travels in real time to FIRS. This simple process creates a digital footprint for transactions that were previously invisible.
Passive Inclusion through Data
The system works passively because it does not rely on intrusive investigations. Visibility itself drives compliance. By analyzing transaction data, FIRS can identify:
✔ Suppliers or service providers who have not registered for tax
✔ Businesses whose declared income does not match invoicing volume
✔ Sectoral turnover patterns for more accurate presumptive taxation
Each data point serves as a lead for gradual onboarding into the formal tax system, rather than immediate enforcement.
Why This Matters for Nigeria
Nigeria’s tax-to-GDP ratio remains one of the lowest in Africa, largely due to informal operators being excluded. Expanding fiscal capacity cannot rely solely on new taxes or higher rates—it requires broadening the tax base. The e-invoice system embeds fiscal visibility within everyday business operations, creating a non-confrontational path for tax inclusion.
Building an Intelligent Tax Ecosystem
The long-term potential of fiscalisation grows when e-invoice data connects with national identity numbers (NIN), bank verification numbers (BVN), and business registration databases. Nigeria could then administer a smart tax system that shifts the focus from enforcement to analytics, behavioral nudges, and automated returns for small enterprises.
From Compliance to Collaboration
The e-invoice system also reshapes the relationship between taxpayers and authorities. Fiscalisation can function as a trust-building tool, reducing arbitrary assessments, eliminating invoice fraud, and supporting fairer taxation.
Benefits extend to:
✔ Governments gaining real-time, predictable revenue insights
✔ Businesses obtaining audit trails, credibility, and easier access to finance
✔ Informal operators gradually joining the formal economy
The Way Forward
To fully realize its potential, Nigeria must:
✔ Simplify onboarding for micro and small enterprises
✔ Run awareness campaigns highlighting benefits, not just penalties
✔ Integrate with MSME finance initiatives to turn visibility into opportunity
If implemented effectively, e-invoicing will not only seal revenue leakages but also transform Nigeria’s tax landscape from coercion to inclusion, from opacity to transparency, and from enforcement to engagement.
In essence, fiscalisation is not just about control—it’s about connection. The e-invoice solution offers Nigeria a way to see and serve the informal economy as fiscal partners rather than enforcement targets.
More in-depth: Federal Inland Revenue Service – FIRS
