The Federal Inland Revenue Service (FIRS) has initiated a significant overhaul of Nigeria’s tax administration with the introduction of the Merchant Buyer Solution (MBS), an e-invoicing system designed for real-time transaction monitoring. This move represents a pivotal shift from the nation’s longstanding reliance on manual and often delayed tax reporting, aiming to enhance transparency and compliance across the economy. The system, which formally went live on August 1, 2025, mandates integration for large taxpayers, signaling Nigeria’s commitment to modernising its fiscal framework.

At its core, the MBS acts as a real-time verification layer, sitting atop the existing TaxPro Max platform. Unlike previous methods where Value Added Tax (VAT) returns were submitted monthly and invoices validated retrospectively, MBS validates commercial transactions as they occur. Oluyemisi Daramola, Managing Partner at Bamidele Daramola & Co., highlighted its precision, stating, “Each transaction carries a unique verification code and timestamp. Nothing moves unrecorded, and every record can be independently validated.”

The rollout commenced in late 2024, targeting companies with an annual turnover of N5 billion or more, encompassing approximately 5,000 large taxpayers nationwide. Within weeks of the official launch, around 1,000 companies, representing about 20 percent of eligible taxpayers, began integrating with the platform. Prominent entities such as MTN Nigeria, IHS, and Huawei Nigeria are among those that have started the transition, demonstrating the scale of the initiative.

Despite the ambitious rollout, the transition has not been without its challenges. Many large corporations are reportedly grappling with the complexities of system integration, data mapping, and interpreting the precise technical expectations set by the FIRS. Tax technology expert Ayodapo Bamidele noted that “most of the companies are still in the process of implementation and still trying to apply for extension,” indicating a need for greater clarity and support from the tax authority.

The FIRS views the MBS as crucial for closing tax gaps by enabling real-time tracking of sales volumes, VAT liabilities, related-party transactions, and cross-border transactions. This technological integration positions Nigeria alongside other nations employing advanced digital surveillance for tax purposes. A senior FIRS officer, speaking anonymously, affirmed the government’s objective to “simplify the tax administration system through harmonising the various tax legislations,” a goal now deemed ready for implementation.

Beyond mere efficiency, the deeper impact of the MBS lies in assurance. Oluyemisi Daramola emphasised that “continuous validation strengthens governance, enhances investor confidence, and aligns Nigeria’s reporting standards with global best practice.” The system is envisioned as a digital backbone that automates processes, cuts costs, improves cash flow through faster payments, and significantly boosts compliance and transparency by reducing errors and fraud.

Implementing digital tax monitoring requires substantial internal upgrades for companies, even those with robust infrastructures. Governance structures must mature, and systems need to connect securely and consistently. Daramola cautioned that “internal controls must shift from procedural to proactive,” as API failures or mismatched datasets could lead to reporting inconsistencies, penalties, or operational downtime. Companies are now judged on the live accuracy of their systems rather than post-audit reactions.

However, analysts suggest it is premature to definitively assess the system’s impact on revenue generation, given its operational period of barely six months. There is currently no established baseline for comparison, even for integrated companies. Any observed increases in declared revenue could stem from seasonal demand, price fluctuations, or broader macroeconomic factors, rather than solely attributable to the MBS.

While not yet mandated, Small and Medium-sized Enterprises (SMEs) are likely to be included in later phases of the e-invoicing initiative. Tax experts advise SMEs with the technical and financial capacity to begin preparations now. The critical challenge ahead for Nigeria’s real-time tax monitoring ambition will be the FIRS’s readiness to effectively support millions of smaller businesses, determining the ultimate reach and success of this transformative digital endeavor in the coming years.

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