How does the Mandatory E-Invoicing, introduced in the new law works?

Based on the Nigeria Tax Administration Act 2025 and the rollout by the Nigeria Revenue Service (NRS) (formerly FIRS), mandatory e-invoicing is the new standard for 2026.

If your business earns over ₦100 million, you are now required to move away from paper or simple PDF invoices to a "Pre-Clearance" digital model. Here is exactly how it works:

1. The Pre-Clearance Model (The "Approval First" Rule)

In the old days, you sent an invoice to a client and filed it later. In 2026, the government sits in the middle of your transaction.

• Step 1: You generate an invoice in your accounting software (e.g., Zoho, QuickBooks) or a specialized NRS-approved portal.
• Step 2: Before the client sees it, the invoice is sent digitally to the NRS Merchant-Buyer Solution (MBS) portal for validation.
• Step 3: The NRS checks the invoice for errors and "clears" it.
• Step 4: You receive back a validated invoice containing a QR Code, an Invoice Reference Number (IRN), and a Cryptographic Stamp.
• Only then is the invoice considered a legal document that you can send to your client.

2. Business-to-Consumer (B2C) vs. Business-to-Business (B2B)

The rules vary depending on who you are selling to:

• B2B / B2G (Government): You must use the pre-clearance model described above. If you don't, your client cannot claim "Input VAT" (the tax they paid to you), and they will likely refuse to pay your invoice.
• B2C (Individual Customers): If you sell to regular people (retail), you don't need "pre-clearance" for every small receipt. However, any receipt over ₦50,000 must be reported to the NRS system within 24 hours.

3. The 72-Hour "Buyer Review" Window

This is a major change for cash flow management. Once you issue a validated e-invoice:

• The buyer has 72 hours to accept or reject it on their own NRS dashboard.
• If they reject it (e.g., due to a pricing error), you must cancel the e-invoice in the system and start over.
• If they don't act within 72 hours, the invoice is often "auto-accepted" as a valid tax liability for your business.

4. Massive Penalties for Non-Compliance

The 2025 Act does not play around with "manual" holdouts. If you bypass the e-invoicing system:

• Administrative Fine: ₦200,000 per violation.
• Tax Penalty: 100% of the tax due on that invoice (effectively doubling your tax bill).
• Interest: Charged at the CBN Monetary Policy Rate (MPR) plus a spread.
• Input VAT Risk: You won't be able to claim back the VAT you paid to your own suppliers if your system isn't integrated.

How to Get Started

1. Check Status: Visit the NRS e-Invoicing Portal and login with your TaxproMax details to check if your business is "enabled."

Appoint a Provider: Most SMEs don't build their own connection. You hire a System Integrator (like Pillarcraft, Duplo, or others accredited by NITDA) to link your current accounting software to the NRS.