FIRS Unveils Real-Time VAT Portal to Plug Tax Gaps in Nigeria’s Digital Economy
A Leap in Tax Oversight
Dubbed the Transaction Monitoring System, the portal compels financial institutions to route VAT-relevant transactions through it. This gives FIRS real-time visibility into digital payments, enabling automatic detection of VAT liabilities for reconciliation—even though tax payments aren't collected through the platform itself.
Zacch Adedeji, FIRS Executive Chairman, described the system as:
"A transformative leap in transaction visibility. By monitoring VAT‑eligible activities in real time, we are fostering a fair and transparent digital marketplace for all stakeholders."
Tackling Compliance Shortfalls in Digital Finance
FIRS framed the initiative as essential due to the meteoric rise of Nigeria’s digital economy, which has outpaced traditional tax monitoring methods. The agency now believes technology-driven tracking is critical to plug evolving compliance gaps.
The system leverages encryption and AI-based validation to protect data integrity and flag suspicious activities.
How It Works: Integration with Financial Platforms
Institutions joining the system must integrate via APIs, linking to FIRS’s VAT-assessment tool called VAT Rev Assure, before forwarding invoice and transaction data. Transactions processed through fintech startups or payment platforms that don’t collect VAT at checkout will have the platform calculate it on their behalf.
The platform records both the gross payment value and VAT amount, and segregates data between payments made by merchants and end-users. Both banks and fintech firms must log this information through secure admin access to enable refunds or reporting
Legal Authority & Penalties for Non-Compliance
Under the Tax Administration Act’s Section 71, FIRS now possesses legal power to automate tax oversight, assessment, and data collection, ushering in a mandatory digital compliance era starting January 2026. However, using Section 25(4) of the FIRS Act, the agency has already begun enforcement by issuing 30-day integration notices.
Firms that refuse to integrate face severe penalties:
₦1 million (~$650) for the first day of delay
₦10,000 (~$6.50) per day thereafter
Why This Moves Matters
This digital oversight initiative signals a major shift in VAT administration in Nigeria. Key benefits include:
Improved compliance—FIRS gains instant access to VAT-relevant transaction data
Minimized fraud and leakages—unreported digital payments are flagged immediately
Streamlined tax reconciliation—automation replaces lengthy manual audits
It also places more responsibility on fintechs and banks, who now log and report VAT data at source.
