Last week in Abuja, Finance Minister Taiwo Oyedele addressed tax professionals at the Chartered Institute of Taxation of Nigeria's 28th Annual Tax Conference, highlighting the global push to modernize tax systems due to changing supply chains. For Nigerian manufacturers facing the July e-invoicing deadline, this issue is now a critical financial variable.
The New E-Invoicing Framework
Under the new system, every invoice must carry a valid Invoice Reference Number issued through the NRS Merchant Buyer Solution platform. Without it, the invoice is invalid for tax purposes, and the buyer loses the right to claim input VAT. In 2025, the manufacturing sector contributed N1.17 trillion in VAT and N881 billion in Company Income Tax, according to the National Bureau of Statistics.
Supply Chain Dependency
A manufacturer buys raw materials, logistics, packaging, maintenance, and energy from multiple suppliers. Each transaction carries a VAT component recoverable under the reformed system. However, recovery depends entirely on whether the supplier has onboarded onto MBS. Even if a manufacturer perfects its own systems, a meaningful share of input VAT claims may become invalid if vendors fail to comply.
This compliance gap is often overlooked in boardroom discussions, which focus inward on internal readiness. Yet, a manufacturer's tax position is partly determined by suppliers' decisions. If a key vendor has not onboarded, the manufacturer absorbs the cost.
Lessons from Kenya
Kenya's eTIMS system offers instructive parallels. When the e-invoicing mandate took effect, fewer than 1% of eligible businesses had signed up, according to EY's East Africa practice. By late 2025, over 500,000 taxpayers had onboarded, but only 49% were actively transmitting invoices. This caused a supply chain fracture: larger businesses refused to transact with non-compliant suppliers to avoid forfeiting input VAT deductions. Smaller vendors were locked out of long-standing supply chains.
At DigiTax, we supported businesses through Kenya's and Zambia's transitions. The disruption shifted rapidly from compliance to procurement, catching many manufacturers off guard. Those who mapped their supplier base early worked with vendors before enforcement; others replaced suppliers under pressure or absorbed unplanned losses.
Impact on Nigeria's Manufacturing Sector
Nigeria's manufacturing sector is already strained. Real GDP contribution slipped to 8.05% last year from 8.24%, with fragile growth at 1.4%. High energy costs, forex constraints, and infrastructure deficits compress margins. A layer of irrecoverable VAT from supplier non-compliance will be acutely felt.
Finance and procurement teams must now map the supplier base against MBS onboarding status. Vendors not registered or not issuing validated invoices represent a direct cost. Many are mid-sized or small businesses unaware of Phase 2 obligations or lacking technical capacity. The manufacturer's financial exposure remains unchanged.
Conclusion
The Minister of Finance rightly framed tax reforms around changing supply chains. The government's architecture will create a more transparent commercial environment over time, but only when all supply chain participants are connected. Currently, significant gaps exist between the system and supplier networks. Kenya learned this lesson in real time; Nigeria still has weeks to prepare on better terms.
Akinsola is country director at DigiTax, a pan-African e-invoicing platform accredited by the Nigeria Revenue Service as an access point provider and system integrator.
