PwC Sees Tougher VAT, WHT Enforcement Under Real-Time Reporting Regime

Nigeria is accelerating a structural overhaul of its tax administration system, shifting from retrospective audits to real-time reporting of business transactions in a move expected to significantly tighten compliance on value-added tax (VAT) and withholding tax (WHT).

Tax experts at PwC say the transition to fiscalisation, the reporting of transactions in real or near-real time, marks a decisive break from discretionary assessments and after-the-fact reconciliations, embedding compliance directly into business processes.

Speaking during a PwC webinar titled Tax Technology and E-invoicing in Nigeria, Timothy Siloma, Partner, Tax Reporting and Strategy at PwC Nigeria, described the reform as the “logical evolution” of modern tax administration.

“The logical evolution for all tax administration is fiscalisation,” Siloma said, noting that the objective is to pivot from reviewing transactions after they occur to accessing transaction data directly from the point of generation in real time.

Under the emerging framework, tax authorities gain direct visibility into business transactions as they happen, reducing reporting gaps and limiting opportunities for under-declaration. VAT and WHT, long considered vulnerable to compliance leakages, are among the primary focus areas of the reform.

Siloma explained that real-time monitoring is particularly significant in Nigeria’s large informal and semi-formal sectors, where transaction opacity has historically constrained revenue mobilisation.

By linking transaction data directly to tax outcomes, fiscalisation narrows the scope for post-hoc explanations or adjustments.

“Going forward, garbage in will result in immediate and automated tax consequences,” he warned, underscoring the heightened compliance risks for companies that fail to maintain accurate and timely records.

The reform represents more than a technological upgrade; it signals a fundamental shift in the relationship between taxpayers and the revenue authority.

Rather than relying predominantly on periodic audits and manual reviews, the Nigeria Revenue Service (NRS) is building systems that integrate tax oversight into everyday commercial activity.

Kenya’s model of “full fiscalisation” provides a reference point. According to Siloma, under such a system, the revenue authority’s visibility determines tax deductibility, meaning businesses cannot claim expenses for transactions that are not captured within the tax authority’s platform.

While Nigeria’s rollout in more phased, initially targeting large taxpayers, industry observers say the direction of policy is clear.

Early implementation has already revealed structural weaknesses within taxpayer systems. Mohammad Bawa, E-invoicing Project Manager at the NRS, identified data integrity challenges during onboarding.

“We had challenges with the legacy data of taxpayers during onboarding processes because many taxpayers have inactive email addresses, which creates issues during enablement,” Bawa said.

He added that sector-specific business models have required flexibility in system design. According to him, the e-invoicing platform is primarily a “data gathering system” intended to enhance existing filing frameworks rather than replace them.

To ease adoption and mitigate resistance, the NRS has adopted what officials describe as a collaborative approach. Professional bodies, technical partners, and developer communities have been engaged, while simulation portals have been introduced to allow businesses to test integrations before full deployment.

Despite the consultative tone, experts caution that expanded government visibility will inevitably heighten enforcement capacity.
Tax Reporting and Strategy Lead at PwC Nigeria, Kenneth Erikume said richer transaction-level data could expose unprepared companies to additional assessments, penalties, and interest charges.

“There could be potential for additional penalties and interest and additional assessment, because the government would have more information,” Erikume said, stressing that greater transparency does not necessarily imply a softer enforcement environment.

At the same time, the reforms are elevating the tax function within corporate governance structures. With compliance increasingly embedded in enterprise resource planning systems and invoicing platforms, tax departments are assuming a more central role in technology and data strategy discussions.

“This is where the opportunity for invoicing comes, because for the first time, in a tech conversation, tax is taking the lead in those conversations,” Erikume noted.

For resident companies, the message is unambiguous: compliance is no longer a periodic exercise but a continuous process driven by real-time data.