Stransact Blog

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  • Why Nigeria Cannot and Will Not Tax Your Bank Account – Eben Joels

    Why Nigeria Cannot and Will Not Tax Your Bank Account – Eben Joels

    There is a pervasive fear among Nigerians often fueled by aggressive headlines that the government is on the verge of peering into your bank account and arbitrarily debiting “unpaid taxes” based on your daily transaction alerts.

    The fear is understandable. The government is desperate for revenue. The recent passage of the Income Tax Act (ITA) 2025, a product of the current administration’s tax reform committee, was meant to modernize our archaic tax laws. Despite the fanfare, the new Act has failed to address the fundamental structural flaws in the old Personal Income Tax Act (PITA).

    Here is the cold, hard reality: The Nigerian government cannot and will not tax your bank account directly anytime soon. Here is why.

    The Wrong Taxman has the Data (Federal vs. State)

    The primary safeguard preventing Nigeria from taxing your personal bank account is Nigeria’s federal structure.

    Under the Nigerian constitution and retained by the ITA 2025, the Federal Government (via the FIRS or the newly proposed Nigeria Revenue Service) collects taxes from companies. The State Governments (via their State Internal Revenue Services) collect taxes from individuals.

    This creates a massive disconnect. The Federal Government has the data. Through the NIBSS and BVN frameworks, the Federal Government can theoretically track money flows.  However, the Federal Government cannot legally collect Personal Income Tax (PIT) from you unless you are a police officer, military personnel, or a diplomat. For the remaining 99% of the population, that right belongs to the state where you reside.

    The FIRS cannot simply hand over your banking data to 36 states because of complex data privacy and banking secrecy laws that remain largely unaddressed by the new Act. A simple fix such as enacting a nominal federal income tax (say 1%) would have significantly enabled the sharing of data between Federal and State Tax agencies. It could also be used as tool to transfer funds to the vulnerable rather than the current opaque method done via the Ministry of Humanitarian Affairs.

    The 35 Weak Links (State Internal Revenue Services)

    If you live in Lagos, you might have reason to be slightly worried. The Lagos State Internal Revenue Service (LIRS) is an outlier, technologically advanced and aggressive. But for the rest of the country? The system is broken.

    Aside from Lagos and perhaps the FCT, most State Internal Revenue Services (SIRS) are hollow institutions. They are often headed by political appointees; friends of the Governor with zero depth in tax administration or forensic accounting.

    These agencies lack the software to analyze bank statements even if they had them. They lack the political will to compel their wealthy residents to pay the right amount of tax because these wealthy individuals may very well be the sponsors of those holding the highest political positions.

    The State IRS rely almost exclusively on Pay-As-You-Earn (PAYE), where companies do the work for them by deducting taxes at the source. They lack the capacity to audit the millions of personal bank accounts within their domain. They are too weak to enforce collection on individuals who do not earn a salary.

    The “Secondee” Loophole

    The most glaring weakness of the ITA 2025 is that it was touted as a reform to capture the wealthy, yet it arguably makes it easier for the ultra-rich to slip away.

    A major flaw exists in the definition of taxable income regarding “Secondees”, expatriates or Nigerians seconded from foreign firms to work in Nigeria. The Act appears to completely exempt the income of a secondee if they can prove they are paying taxes in their “home country.”

    This is a massive oversight. It means a high-earning executive earning $20,000 a month in Nigeria can avoid paying any tax to the Nigerian state by presenting a tax receipt from a low-tax jurisdiction or their home country. While the average Nigerian employee has their tax deducted at source, the high-net-worth individual with complex global income sources is given a legal exit route. If the law cannot even capture the clearly defined income of a corporate executive, it certainly lacks the sophistication to scrutinize the murky inflows of a personal savings account.

    Bank Turnover ≠ Taxable Income

    Finally, there is a legal hurdle that the tax authorities have not cleared. A credit alert in your bank account is not proof of income. If your spouse transfers money to you for school fees, that is not income. If you sell a used car and the buyer transfers cash, that is a return of capital, not necessarily profit. If you receive a refund for a failed transaction, that is not income.

    For a tax authority to tax your bank account, it must first distinguish between revenue and income. This requires a level of forensic auditing that simply does not exist at the state level. They cannot simply apply a flat tax rate to your total credit alerts without facing lawsuits they would almost certainly lose in a working judiciary.

    Conclusion

    While ITA 2025 has rearranged the furniture, the house remains the same. As long as the collection of personal income tax is left to 36 disparate, under-resourced, and politically compromised State Boards, your bank account remains relatively safe.  And as long as every Nigerian does not pay personal income tax to the center, the current tax reforms from a personal income perspective are inchoate.

    The taxman may bark, but until the constitution is amended to centralize personal tax collection or until the States wake up and employ technocrats rather than politicians, he has no teeth to bite your savings.

    Eben Joels is the Managing Partner of Stransact Chartered Accountants, an audit, tax, and consulting firm in Nigeria. He is also a subject-matter expert in International Tax and Financial Reporting Standards and a licensed attorney.

  • Why Nigeria Cannot and Will Not Tax Your Bank Account

    Why Nigeria Cannot and Will Not Tax Your Bank Account

    There is a pervasive fear among Nigerians—often fueled by aggressive headlines—that the government is on the verge of peering into your bank account and arbitrarily debiting “unpaid taxes” based on your daily transaction alerts.

    The fear is understandable. The government is desperate for revenue. The recent passage of the Income Tax Act (ITA) 2025, a product of the current administration’s tax reform committee, was meant to modernize our archaic tax laws. Despite the fanfare, the new Act has failed to address the fundamental structural flaws in the old Personal Income Tax Act (PITA).

    Here is the cold, hard reality: The Nigerian government cannot—and will not—tax your bank account directly anytime soon. Here is why.

    The Wrong Taxman has the Data (Federal vs. State)

    The primary safeguard preventing Nigeria from taxing your personal bank account is Nigeria’s federal structure.

    Under the Nigerian constitution and retained by the ITA 2025, the Federal Government (via the FIRS or the newly proposed Nigeria Revenue Service) collects taxes from companies. The State Governments (via their State Internal Revenue Services) collect taxes from individuals.

    This creates a massive disconnect. The Federal Government has the data. Through the NIBSS and BVN frameworks, the Federal Government can theoretically track money flows.  However, the Federal Government cannot legally collect Personal Income Tax (PIT) from you unless you are a police officer, military personnel, or a diplomat. For the remaining 99% of the population, that right belongs to the state where you reside.

    The FIRS cannot simply hand over your banking data to 36 states because of complex data privacy and banking secrecy laws that remain largely unaddressed by the new Act. A simple fix such as enacting a nominal federal income tax (say 1%) would have significantly enabled the sharing of data between Federal and State Tax agencies. It could also be used as tool to transfer funds to the vulnerable rather than the current opaque method done via the Ministry of Humanitarian Affairs.

    The 35 Weak Links (State Internal Revenue Services)

    If you live in Lagos, you might have reason to be slightly worried. The Lagos State Internal Revenue Service (LIRS) is an outlier—technologically advanced and aggressive. But for the rest of the country? The system is broken.

    Aside from Lagos and perhaps the FCT, most State Internal Revenue Services (SIRS) are hollow institutions. They are often headed by political appointees—friends of the Governor with zero depth in tax administration or forensic accounting.

    These agencies lack the software to analyze bank statements even if they had them. They lack the political will to compel their wealthy residents to pay the right amount of tax because these wealthy individuals may very well be the sponsors of those holding the highest political positions.

    The State IRS rely almost exclusively on Pay-As-You-Earn (PAYE), where companies do the work for them by deducting taxes at the source. They lack the capacity to audit the millions of personal bank accounts within their domain. They are too weak to enforce collection on individuals who do not earn a salary.

    The “Secondee” Loophole

    The most glaring weakness of the ITA 2025 is that it was touted as a reform to capture the wealthy, yet it arguably makes it easier for the ultra-rich to slip away.

    A major flaw exists in the definition of taxable income regarding “Secondees”—expatriates or Nigerians seconded from foreign firms to work in Nigeria. The Act appears to completely exempt the income of a secondee if they can prove they are paying taxes in their “home country.”

    This is a massive oversight. It means a high-earning executive earning $20,000 a month in Nigeria can avoid paying any tax to the Nigerian state by presenting a tax receipt from a low-tax jurisdiction or their home country. While the average Nigerian employee has their tax deducted at source, the high-net-worth individual with complex global income sources is given a legal exit route. If the law cannot even capture the clearly defined income of a corporate executive, it certainly lacks the sophistication to scrutinize the murky inflows of a personal savings account.

    Bank Turnover ≠ Taxable Income

    Finally, there is a legal hurdle that the tax authorities have not cleared. A credit alert in your bank account is not proof of income. If your spouse transfers money to you for school fees, that is not income. If you sell a used car and the buyer transfers cash, that is a return of capital, not necessarily profit. If you receive a refund for a failed transaction, that is not income.

    For a tax authority to tax your bank account, it must first distinguish between revenue and income. This requires a level of forensic auditing that simply does not exist at the state level. They cannot simply apply a flat tax rate to your total credit alerts without facing lawsuits they would almost certainly lose in a working judiciary.

    Conclusion

    While ITA 2025 has rearranged the furniture, the house remains the same. As long as the collection of personal income tax is left to 36 disparate, under-resourced, and politically compromised State Boards, your bank account remains relatively safe.  And as long as every Nigerian does not pay personal income tax to the center, the current tax reforms from a personal income perspective are inchoate.

    The taxman may bark, but until the constitution is amended to centralize personal tax collection—or until the States wake up and employ technocrats rather than politicians—he has no teeth to bite your savings.

    Eben Joels is the Managing Partner of Stransact Chartered Accountants, an audit, tax, and consulting firm in Nigeria. He is also a subject-matter expert in International Tax and Financial Reporting Standards and a licensed attorney.

  • FRCN Requirements on Internal Control over Financial Reporting [ICFR]

    FRCN Requirements on Internal Control over Financial Reporting [ICFR]

    Over the past two decades, corporate scandals most notably Enron and global financial crises have driven major reforms in financial reporting. For Public Interest Entities (PIEs), this led to the adoption of stronger ICFR frameworks like COSO 2013 Internal Control: Integrated Framework, reinforcing the need for transparency, accountability, and stakeholder trust.

    In Nigeria, the Financial Reporting Council (FRC) requires all Public Interest Entities to implement and report on the effectiveness of their ICFR. With the mandate effective from financial years ending on or after 31 December 2024. 2025 marks the second year of mandatory compliance. PIEs are reminded to maintain and annually assess their ICFR, ensuring ongoing transparency, accountability, and independent assurance.

    Read more: Stransact makes World Tax list of Tier-1 firms in tax services

    What Is ICFR and Why Does It Matter?

    Internal Control over Financial Reporting (ICFR) refers to the processes and controls established by management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with applicable accounting standards.

    ICFR Core Objectives

    • Ensuring transactions are recorded accurately to support the preparation of financial statements.
    • Providing assurance that receipts and expenditures are made only with proper authorization.
    • Safeguarding assets against unauthorized use, loss, or disposition.

    While most organizations already maintain internal controls, what’s evolving is the benchmarking of these controls against globally recognized frameworks most notably, the COSO 2013 Internal Control – Integrated Framework.

    This shift enhances the effectiveness, consistency, and auditability of ICFR, ensuring that financial statements are not only accurate and complete but also compliant with international best practices.

    Read more: National Repository Portal and Financial Reporting Compliance: A Guide for Nigerian PIEs

    What does FRC expects from Public Interest Entities Management’s Responsibility

    Management is responsible for the design, implementation, and annual certification of ICFR effectiveness. As mandated by the Financial Reporting Council of Nigeria (FRCN), this responsibility cannot be delegated to external auditors to preserve their independence. While internal audit or independent consultants may support the process, only management must assess and certify ICFR annually.

    External Auditors’ Role

    External auditors are required to independently review management’s ICFR assessment and issue a separate attestation report, without compromising their independence. This may be conducted as part of an integrated audit, which includes:

    • A distinct ICFR audit (with its own fee), and
    • A financial statement audit informed by ICFR conclusions.

    Even if ICFR is ineffective, it doesn’t mean the financial statements are misstated but it may require more substantive testing and higher audit fees.

    Read more: Financial Reporting in Nigeria: The Critical Role of ICFR

    Call to Action

    • CEOs: Champion ICFR as a continuous, enterprise-wide Ensure it is adequately resourced and embedded into the organization’s governance and risk management framework not treated as a mere compliance checkbox.
    • CFOs: Lead continuous maintenance of ICFR and annual certification of ICFR. Ensure timely, evidence-based assessments and maintain clear documentation to support transparency and audit readiness.
    • External Auditors: Uphold independence by refraining from performing ICFR assessments. They should independently review and attest to management’s ICFR assessment as part of the integrated audit.

    Read more: Why IFRS 18 Should Be a Strategic Priority for CFOs and Financial Leaders

    Looking Ahead: Strengthening Trust Through Effective ICFR Implementation

    As Nigeria’s regulatory landscape continues to evolve, the successful implementation of Internal Control over Financial Reporting (ICFR) stands as a defining marker of corporate integrity and governance maturity. For Public Interest Entities, this is more than a compliance exercise; it is a commitment to building investor confidence, enhancing financial transparency, and reinforcing accountability across all levels of the organization.

    In 2025 and beyond, organizations that embed ICFR into their governance culture will not only stay compliant but also position themselves as trusted leaders in financial reporting excellence.

  • How the Nigeria Tax Act 2025 Empowers Individual Taxpayers

    How the Nigeria Tax Act 2025 Empowers Individual Taxpayers

    The Nigeria Tax Act (NTA) 2025 represents a landmark reform in the country’s fiscal landscape, particularly for individual taxpayers. Enacted to modernize and harmonize Nigeria’s tax framework, the Act introduces a suite of progressive measures aimed at enhancing equity, simplifying compliance, and delivering tangible reliefs to low and middle-income earners.

    This article explores the key provisions of the NTA 2025 that affect individuals, highlighting the opportunities, reliefs, and incentives embedded in the new law and what they mean for taxpayers, employers, and the broader economy.

    Read more: Stransact makes World Tax list of Tier-1 firms in tax services

    A New Era for Personal Taxation

    The NTA 2025 repeals and replaces the Personal Income Tax Act (PITA) 2011, addressing long-standing ambiguities and introducing a more transparent, inclusive, and equitable tax regime. The reforms are designed to align Nigeria’s tax system with global best practices while ensuring that taxation supports, rather than stifles, economic growth.

    Read more: Nigeria Tax Reform Act: What Businesses Need to Know

    Key Provisions of the NTA 2025 and their Implications

    1. Expanded Definition of Chargeable Income: The Act now explicitly lists items such as: Prizes, winnings, and honoraria, grants, awards, laurels, etc.; profits or gains from transactions in digital or virtual assets; disposal of money or money instruments; profits or gains from the disposal of property or fixed assets; and securities; discounts or rebates, etc., under the scope of taxable income.This eliminates previous ambiguities surrounding the tax treatment of income from emerging sectors and informal sources, thereby widening the tax net and enhancing government revenue without increasing tax rates for compliant taxpayers. It reflects the government’s policy objective of modernizing the tax base to capture new forms of wealth and align Nigeria’s tax framework with global best practices [NTA 2025, Section 4].
    1. Introduction of Rent Relief Deduction: Individual taxpayers can now claim 20% of their annual rent (up to a maximum of ₦500,000) as an Eligible Deduction, provided valid tenancy documentation is provided. This provision is particularly beneficial for salaried workers and urban dwellers, offering meaningful relief from housing-related expenses [NTA 2025, Section 30 (2) (vi)].
    1. Abolition of the Consolidated Relief Allowance (CRA): The CRA, previously a blanket deduction for all taxpayers, has been repealed. In its place, the Act introduces a more itemized and transparent system of deductions, encouraging accurate reporting and aligning tax reliefs with actual expenses incurred.
    1. Enhanced Compensation for Loss of Office: The tax-exempt threshold for compensation due to loss of office has now been increased from ₦10 million to ₦50 million (only the excess above this new threshold will constitute chargeable gains). This change provides greater financial protection for individuals facing job termination or workplace-related injuries [NTA 2025, Section 50 (1)].
    1. Revised Progressive Tax Bands: The Act introduces a new progressive tax structure, adjusting rates from the previous 7%–24% under PITA to 0%–25% under the NTA. This ensures that:
    • Low-income earners (earning the minimum wage and below /month) are exempt from income tax
    • Middle-income earners benefit from reduced tax burdens
    • High-income earners contribute a fairer share of their income towards national development
      [NTA Fourth schedule).
    1. Clarified Definitions for Key Tax Terms: To eliminate ambiguity and reduce disputes, the Act provides precise definitions for terms such as:
    • Non-Resident Individual (NRI); Interest; Dividend; Royalty
    • This clarity enhances legal certainty and simplifies compliance for both taxpayers and tax administrators [NTA 2025, Sections 7-8, 202].

    Other Notable Provisions and Compliance Implications

    Beyond the major reforms highlighted above, the Nigeria Tax Act 2025 introduces several additional measures that shape how individuals earn, report, and manage their tax obligations.

    • Taxation of Capital and Chargeable Gains: The Act consolidates the taxation of chargeable gains, bringing profits from the disposal of property, securities, or other assets directly within the personal income tax framework. This integration simplifies administration but also means that individuals must now evaluate the tax impact of every asset sale or transfer. Certain exemptions remain for personal residences and low-value personal assets.
    • Clarified Residence and Source Rules: Sections 7 – 8 establish clearer tests for determining whether an individual is resident in Nigeria and whether income is derived from Nigerian sources. These provisions are especially relevant for Nigerians earning from remote or cross-border work, digital businesses, or offshore investments. Proper documentation of residence and income source will be critical for compliance.
    • Broader Range of Allowable Deductions: In addition to the new rent relief, the NTA 2025 retains or clarifies deductions for pension contributions, National Housing Fund (NHF), and National Health Insurance Scheme (NHIS) contributions, as well as verified donations to approved charitable causes. These provisions reward documented savings and social contributions, encouraging a more structured financial culture.
    • Presumptive Taxation for Informal Income Earners: To improve inclusion and widen the tax net, the Act empowers the tax authorities to apply presumptive assessment frameworks for individuals or micro-enterprises with incomplete records. This ensures that self-employed and gig-economy earners contribute fairly, while still providing mechanisms for appeal and voluntary disclosure.
    • Digitalization and Enhanced Compliance Obligations: Complementing the NTA are reforms under the Nigeria Tax Administration Act 2025, which mandate electronic filing, use of Tax Identification Numbers (TINs), and stricter record-keeping for individuals. Taxpayers are therefore encouraged to adopt digital compliance tools and maintain proper documentation to avoid penalties.
    • Effective Date and Transition Arrangements: Most provisions of the NTA 2025 relating to individuals take effect from 1 January 2026, giving taxpayers time to understand the new framework and adjust their financial and payroll systems accordingly. Transitional guidelines are expected from the Federal Inland Revenue Service (FIRS) and relevant State Tax Authorities to aid smooth implementation.

    Read more: Why IFRS 18 Should Be a Strategic Priority for CFOs and Financial Leaders

    Beyond Compliance: A Pathway to Financial Empowerment

    The NTA 2025 is not merely a legislative update, it is a strategic tool for financial empowerment. By offering targeted reliefs and incentives, the Act encourages individuals to: Plan their finances more effectively, leverage available deductions and engage proactively with the tax system.

    For employers, the reforms necessitate a review of payroll systems, employee benefits, and vendor engagement processes to ensure full alignment with the new tax framework.

    Read more: Stransact expands horizon, unveils Deals and Advisory Services

    Looking Ahead: A More Inclusive Tax Culture

    The Nigeria Tax Act 2025 positions personal taxation as a catalyst for inclusive economic growth. By prioritizing fairness, transparency, and simplicity, it fosters a culture of voluntary compliance and trust in the tax system.

    Whether you are a salaried employee, entrepreneur, or investor, the new law offers a timely opportunity to reassess your financial strategy, maximize your tax benefits, and contribute meaningfully to national development.

  • How Telecom Operators, Fintech and Retail Brands Can Leverage MVNO Licenses in Nigeria

    How Telecom Operators, Fintech and Retail Brands Can Leverage MVNO Licenses in Nigeria

    In 2023, the Nigerian Communications Commission (NCC) introduced a structured licensing regime for Mobile Virtual Network Operators (MVNOs) to enhance competition and expand digital inclusion. According to BusinessDay (2025), the NCC issued 46 MVNO licenses across five tiers, representing one of the most ambitious frameworks in Africa. However, as of August 2025, only two operators: Vitel Wireless and EmoSIM have commenced commercial operations. This disparity between policy ambition and market activation prompts a critical evaluation of Nigeria’s progress in telecom liberalization.

    Understanding Mobile Virtual Network Operators

    MVNOs deliver mobile services without owning radio access networks or spectrum. Instead, they lease capacity from incumbent Mobile Network Operators (MNOs) and differentiate through customer segmentation, pricing models, bundled offerings, user experience, and distribution strategies. Globally, MVNOs have demonstrated effectiveness in:

    • Stimulating innovation through niche offerings tailored to students, rural users, SMEs, travelers, and fintech-oriented customers.
    • Enhancing affordability by exerting downward pressure on retail prices and enabling targeted bundles.
    • Deepening market segmentation through localized content and flexible service plans.

    Nigeria’s Licensing Framework: A Step Forward

    The NCC’s five-tier licensing model represents a significant advancement in liberalizing the telecommunications sector. It accommodates varying degrees of operational independence, ranging from basic resellers to full-service providers with core network capabilities. This flexible structure is designed to attract a diverse array of market participants, including startups and established technology firms.

    Furthermore, the framework aligns with Nigeria’s National Broadband Plan and Digital Economy Strategy, which aim to increase broadband penetration and bridge the digital divide. In principle, MVNOs are well-positioned to extend connectivity to underserved regions and reduce data costs. The licensing tiers include:

    • Tier 1 (Reseller MVNOs): Focus on branding, distribution, and customer service, relying entirely on MNOs for network operations.
    • Tier 2 (Service Provider MVNOs): Manage customer care, billing, and select value-added services.
    • Tier 3 (Core MVNOs): Operate critical network elements such as the Home Location Register (HLR) and Home Subscriber Server (HSS), while leasing radio access.
    • Tier 4 (Aggregator/Enabler MVNOs): Aggregate network capacity and wholesale it to smaller MVNOs, reducing the need for direct MNO agreements.
    • Tier 5 (Full MVNOs): Function nearly as MNOs, operating core networks while leasing spectrum and radio access.

    Read more: International Tax Review (ITR) Ranks Stransact Chartered Accountants Among Tier-1 Firms

    The Execution Gap

    Despite a robust framework, market activation has been limited. BusinessDay (2025) reports that only Vitel Wireless and EmoSIM have launched commercially, out of the 46 licensed MVNOs. Several challenges have impeded progress:

    • Infrastructure Bottlenecks: MVNOs depend on MNOs for network access, and negotiations over pricing and service-level agreements have proven complex.
    • Market Readiness: Many MVNOs lack the technical and financial capacity to scale operations. The Nigerian market remains price-sensitive and dominated by a few major MNOs.
    • Regulatory Ambiguity: While the NCC has issued a licensing framework, there is limited clarity regarding enforcement mechanisms, dispute resolution, and consumer protection specific to MVNOs.

    Untapped Potential

    Nigeria continues to present substantial growth opportunities. Mobile internet adoption remains low, and millions of citizens are underserved or offline. MVNOs can address this gap by offering:

    • Localized propositions, including language-specific content and regionally tailored pricing models.
    • Flexible commercial models such as family wallets, shared data plans, and SME-focused bundles.
    • Embedded connectivity for fintech, edtech, and health tech applications, bundling data with essential services.

    According to Grand View Research (2025), the global MVNO market is projected to reach USD 137.31 billion by 2030, growing at a CAGR of 7.7%. Nigeria possesses the demographic and digital appetite to capture a meaningful share of this market, provided enabling conditions are established.

    Read more: Why IFRS 18 Should Be a Strategic Priority for CFOs and Financial Leaders

    Strategic Imperatives

    To realize the full potential of MVNOs, several strategic interventions are necessary:

    • Infrastructure Sharing Mandates: The NCC should enforce equitable access terms between MNOs and MVNOs to prevent anti-competitive practices.
    • Capacity Building: Technical and financial support for MVNO startups is essential to bridge the execution gap.
    • Consumer Awareness: Public education initiatives can enhance understanding of MVNO offerings and their value proposition.
    • Policy Integration: MVNO strategy should be harmonized with broader digital economy initiatives, including rural broadband expansion and financial inclusion.

    Read more: From Traditional to Digital: How Financial Services Can Thrive in the Era of Fintech

    Conclusion

    MVNO licensing in Nigeria is a commendable initiative with transformative potential. However, without effective execution, it risks becoming a missed opportunity. The regulatory framework is in place, market demand is evident, and digital inclusion remains a national priority. A coordinated effort by regulators, operators, and innovators is imperative to translate policy into tangible progress.

  • Why IFRS 18 Should Be a Strategic Priority for CFOs and Financial Leaders

    Why IFRS 18 Should Be a Strategic Priority for CFOs and Financial Leaders

    For years, CFOs and investors have struggled with varying interpretations of “operating profit,” making it difficult to compare performance and assess value accurately. The International Accounting Standards Board (IASB) is addressing this challenge with IFRS 18 Presentation and Disclosure in Financial Statements, a transformative standard effective January 1, 2027.

    More than a compliance update, IFRS 18 is a strategic shift, that establishes a disciplined framework that enhances transparency, strengthens audit reliability, and reinforces stakeholder confidence in financial reporting.

    The Core Change: A Structured Financial Narrative

    IFRS 18 introduces a disciplined framework for the income statement, requiring companies to classify all income and expenses into three distinct categories:

    • Operating: Core business activities
    • Investing: Returns from non-core assets
    • Financing: Costs of capital and interest

    It mandates three standardized subtotals:

    • Operating profit or loss.
    • Profit or loss before financing and income tax.
    • Profit or loss.

    This structure eliminates ambiguity and ensures that operating profit reflects only the results of primary business activities before financing and investment effects.

    Crucially, IFRS 18 also brings Management-defined Performance Measures (MPMs), non-GAAP metrics like EBITDA into the scope of audited financial statements. Companies must now reconcile MPMs to IFRS-defined subtotals in a dedicated note, ending the era of opaque investor presentations.

    Read more: National Repository Portal and Financial Reporting Compliance: A Guide for Nigerian PIEs

    Strategic Impact on Investment Valuation

    For investors, analysts, and valuation professionals, IFRS 18 is a game-changer:

    • Enhanced Comparability: Peer benchmarking becomes more reliable, especially for metrics like EV/EBIT.
    • Improved Forecasting: DCF and earnings models benefit from clearer categorization of recurring vs. non-recurring items.
    • Reduced Risk Premium: Greater transparency lowers uncertainty, potentially reducing the cost of capital.

    Example in Practice:
    A telecom company that previously highlighted EBITDA must now disclose it as an MPM, reconcile it to IFRS-defined operating profit, and explain adjustments, giving investors a clearer view of sustainable earnings.

    Challenges for CFOs: From Compliance to Competitive Advantage

    While the benefits are clear, the transition to IFRS 18 presents critical challenges for finance leaders:

    1. System Overhaul: ERP and reporting systems must be reconfigured to reflect new categories and subtotals.
    2. MPM Governance: CFOs must ensure consistency, audit readiness, and strategic alignment of disclosed metrics.
    3. Segment Reporting Complexity: More granular disclosures may require restructuring internal reporting frameworks.
    4. Stakeholder Communication: Investor relations must adapt messaging to reflect IFRS 18’s structure and disclosures.

    Example:
    A multinational with diverse business units must now present segment results using IFRS 18’s structure. This may require redefining KPIs and retraining finance teams across jurisdictions.

    The Strategic Imperative for Leadership

    C-suite leaders should view IFRS 18 as an opportunity to refine the company’s financial narrative and build deeper trust with the market. Key actions include:

    • Proactive Engagement: Initiate cross-functional discussions with finance, audit, and board stakeholders.
    • Strategic Communication: Develop investor messaging that explains the new presentation and its implications.
    • KPI Alignment: Reassess how the new definition of operating profit affects internal performance metrics and executive compensation.

    Read more: Risk-Based Auditing for Nigerian Non-Profit Organizations: Enhancing Accountability and Effectiveness

    Conclusion: A New Era of Financial Clarity

    IFRS 18 is more than a technical update, it is a strategic mandate for clarity, consistency, and credibility. Organizations that embrace this change proactively will not only meet compliance requirements but also strengthen governance, enhance valuation credibility, and command investor confidence in an increasingly transparent financial landscape.

    For business leaders and CFOs preparing for the implementation of IFRS 18, expert guidance can make all the difference. If you have any questions or would like to understand how IFRS 18 may impact your financial reporting and strategy, reach out to us at [email protected]; our team is ready to help you navigate the transition, strengthen compliance, and communicate financial performance with greater clarity and confidence.

  • FIRS Extends Deadline for Large Taxpayers on E-Invoicing & E-Fiscal System (EFS)

    FIRS Extends Deadline for Large Taxpayers on E-Invoicing & E-Fiscal System (EFS)

    The Federal Inland Revenue Service (FIRS) has announced a three-month extension for the mandatory onboarding and transmission of electronic invoices under the National E-Invoicing & Electronic Fiscal System (EFS) regime.

    This extension applies to Large Taxpayers (businesses with annual turnover of ₦5 billion and above) who are required to comply with the new Merchant-Buyer Solution (MBS) platform.

    While the E-Invoicing & EFS system officially went live on 1 August 2025, the deadline for full onboarding, integration, and mandatory compliance has now been shifted from 1 August 2025 to 1 November 2025. According to the FIRS, this adjustment recognizes the operational challenges faced by many taxpayers in meeting the initial timeline, despite the successful go-live of the platform.

    Presentation Slide: Merchant Buyer Solution e-Invoicing System

    What is the E-Invoicing & EFS System?

    The National E-Invoicing & Electronic Fiscal System (EFS) is a digital solution introduced by FIRS to modernize and streamline Nigeria’s tax compliance framework.

    Through the Merchant-Buyer Solution (MBS) platform, businesses will:

    • Issue invoices electronically in real-time.
    • Ensure transparency in transactions between buyers and sellers.
    • Enable automatic transmission of invoice data directly to FIRS.
    • Reduce risks of tax evasion, manipulation, or under-reporting.

    The system will also provide FIRS with more accurate transaction data, strengthening Nigeria’s tax administration and fostering a fairer business environment.

    Why the Extension Matters

    The extension offers taxpayers additional time to finalise their onboarding, integration, and compliance procedures. More importantly, it reflects FIRS’ commitment to encouraging voluntary compliance rather than penalizing businesses struggling with technical or operational bottlenecks.

    In its statement, the agency emphasized that the move is intended to create a smoother and more inclusive transition into the e-invoicing regime, allowing businesses to adapt without disruption to their operations.

    Read more: Navigating the Future of Tax Compliance: FIRS to Roll Out E-Invoicing in Nigeria

    FIRS’s Commitment to Support

    FIRS has pledged to continue working closely with stakeholders through engagements, technical support, and ongoing training programs. Businesses are encouraged to take advantage of this window to complete the necessary integrations and avoid last-minute compliance challenges.

    FIRS Executive Chairman, Zacch Adedeji, Ph.D., reaffirmed that the introduction of the e-invoicing platform is part of FIRS’ broader reforms aimed at modernizing Nigeria’s tax system, improving efficiency, and ensuring fairness in tax administration.

    Next Steps for Taxpayers

    With the new compliance deadline of 1st November 2025, large taxpayers are advised to:

    • Complete onboarding and system integration as soon as possible.
    • Train their accounting and finance teams on the use of the MBS platform.
    • Test invoice submissions to ensure smooth real-time reporting.

    Read more: Stransact, NRS upskill corporates on how to navigate Nigeria’s new tax landscape

    As businesses prepare for this transition, it is crucial to review existing invoicing and reporting processes to ensure full compliance with the new system. While the e-invoicing regime may present initial challenges, it also offers an opportunity to enhance transparency, strengthen controls, and improve efficiency.

    At Stransact Chartered Accountants, we are well-positioned to assist businesses in understanding the requirements, implementing compliant processes, and navigating any uncertainties. We encourage stakeholders to reach out to us for tailored guidance and support in adapting seamlessly to this reform.