Nigeria targets tax leakages with real-time VAT platform

Nigeria’s Federal Inland Revenue Service (FIRS) has launched a real-time transaction monitoring portal aimed at tightening oversight of Value Added Tax (VAT) collections across the country’s rapidly expanding digital economy.

The new system, dubbed the Transaction Monitoring System, mandates integration from banks, fintechs, and payment service providers, granting the tax agency visibility into VAT-eligible electronic payments. While the portal does not directly collect taxes, it enables FIRS to assess taxpayer thresholds, reconcile invoices, and audit declarations against bank records.

“This system represents a transformative leap in transaction visibility,” said FIRS Executive Chairman Zacch Adedeji. “By monitoring VAT-eligible activities in real time, we are fostering a fair and transparent digital marketplace for all stakeholders.”

The rollout follows recent legislation under President Bola Tinubu’s administration that empowers FIRS to automate tax processes. Although the new laws take effect in January 2026, the agency is leveraging existing provisions to begin implementation with a 30-day notice to taxpayers.

Financial institutions are required to register on the portal and integrate via APIs. Payment service providers must submit VAT data for each transaction, whether collected at checkout or calculated post-payment. Transactions above ₦5 million ($3,265) are prioritised, with encryption and AI-driven validation ensuring data integrity.

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The move underscores Nigeria’s push to modernise tax administration and plug revenue leakages in a digital-first economy that has outpaced traditional compliance mechanisms.