Nigeria’s Federal Inland Revenue Service (FIRS) has unveiled a real-time Transaction Monitoring System to track all VAT-eligible electronic transactions, mandating integration from banks, card schemes, fintechs, and payment service providers.
According to a report by Tech Cabal, the move is part of an aggressive push to plug tax leakages in Nigeria’s rapidly expanding digital economy.
Speaking on this, FIRS Executive Chairman Zacch Adedeji said,
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“This system represents 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”.
The portal requires financial institutions to route transactions through the system, granting FIRS instant visibility into VAT-eligible payments and potential deductions. While FIRS will not directly collect taxes through the portal, it will use the data to automatically reconcile invoices and assess taxpayer thresholds via a centralised dashboard.
The agency stated that Nigeria’s fast-growing digital economy has outpaced traditional tax monitoring methods, resulting in significant gaps in compliance and transaction visibility. To address this, the new platform leverages real-time data collection, encryption, and AI-driven validation to ensure transaction integrity.
This directive comes after Nigeria’s President Bola Tinubu, on June 26, 2025, granted assent to the following four landmark tax reform bills: Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board (Establishment) Bill (now “Acts”).
The assent by the President is a culmination of efforts by the Presidential Fiscal Policy and Tax Reforms Committee to reshape the landscape of Fiscal/Economic governance and tax administration in Nigeria, with a view to supporting the economic policy of the Administration.
It is expected that the Acts will provide better oversight on government revenues, and streamline tax administration in Nigeria to bring it closer to best practices globally and improve efficiencies in tax administration in Nigeria.
Notably, after a conference held by the FIRS on July 22 and 23 2025, in a statement quoted by the FIRS CEO, he noted that the event was held to spotlight the agency’s “intensified efforts in tackling IFFs, including strengthening compliance mechanisms, enhancing beneficial ownership transparency, and leveraging technology to detect and deter tax evasion, trade mispricing, and other illicit outflows.”
Currently, financial institutions in Nigeria are being asked to integrate with the portal as they handle millions of micro-transactions daily. Banks only report transactions above N5 million ($3,200), leaving smaller taxable transactions largely undocumented. By integrating these institutions, FIRS aims to capture a major leakage point in consumption tax collection and standardise data on taxable transactions.
Although the new tax laws take effect in January 2026, FIRS is exercising its existing powers under Section 25(4) of the FIRS Act, which allows it to issue a 30-day notice to taxpayers to integrate with the system.
FIRS clarified that transaction data alone is not a definitive indicator of tax liability. Before using financial data for assessments, it will be cross-checked against taxpayers’ self-assessments, where individuals and businesses can claim eligible deductions to reduce taxable income.
Overall, while the directive strengthens Nigeria’s tax system and promotes transparency, it places significant compliance demands on financial institutions, which could reshape operational and cost structures in the fintech and banking sector.