How FIRS Will Use Technology to Track Tax Defaulters in Nigeria (New System Explained)

The Federal Inland Revenue Service (FIRS) is entering a new era of tech-driven tax administration—and this shift is about to change how Nigerians and businesses pay taxes.

For years, the biggest challenge in Nigeria’s tax system has been non-compliance. Many individuals and businesses earn money but never register, file taxes, or pay what they owe.

Now, with the new digital reforms, FIRS is closing those loopholes using technology, automation, and real-time data monitoring.

To understand the new reforms and updates directly from the government, you can also visit the
👉 FIRS official website: https://firs.gov.ng/

Below is a simple explanation of how the new system works and what it means for you.

1. BVN, NIN, and Bank Account Linking

FIRS now has access to harmonized identity data.

This means:

• Every bank account is tied to a BVN or NIN

• Your identity can be matched across platforms

• FIRS can easily detect people earning income but not paying tax

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If your BVN shows high inflows but your TIN shows zero tax filings, you enter the risk list.

2. Automatic Monitoring of Bank Transactions

Under the new rules, FIRS can receivereal-time information from banks about:

• Large cash deposits

• High-value transfers

• Business transactions from personal accounts

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• Suspicious income patterns

This helps identify people running businesses or earning income without filing annual tax returns.

3. AI-Powered Risk Scoring System

FIRS has deployed an AI system that:

• Flags inconsistent financial behavior

• Detects unreported business income

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• Identifies companies with fake losses

• Tracks lifestyle vs declared tax

• Scores each taxpayer based on risk

High-risk defaulters are selected automatically for audits or investigations.

4. Cross-Checking with Corporate Affairs Commission (CAC)

FIRS now connects directly with CAС’s database.

This allows them to:

• See every registered business

• Check directors’ identities

• Match company financials with personal income

• Detect dormant companies still earning money informally

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If your company is registered but not filing taxes, FIRS gets a notification.

5. Monitoring Social Media and Online Businesses

Online vendors are not exempt.

FIRS is now tracking:

• Instagram, TikTok, WhatsApp sellers

• Online coaching and digital courses

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• YouTubers and influencers

• Affiliate marketers

• Crypto traders

• Anyone receiving payments through fintech platforms

The system picks signals from payment gateways, ads, and brand partnerships.

6. Integration with Property, Land & Vehicle Registries

FIRS also connects with:

• State land registries

• Real estate transactions

• Auto registrations (FRSC, VIO)

• Luxury items purchased

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If your lifestyle does not match your declared income, you enter the audit watchlist.

Example:
Someone buying land in Lagos or Abuja with zero tax record becomes a red flag.

7. E-Invoicing and Digital Receipts

New electronic invoicing systems will help FIRS track:

• Business sales

• VAT collections

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• Import/export values

• Supplier transactions

Companies can no longer hide revenue or fabricate invoices.

8. Automated Tax Deduction for Certain Sectors

Some industries now have automated tax collection:

• Telecom recharge and data

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• Online payments

• Betting and gaming

• POS transactions

• Foreign digital companies

Taxes are deducted automatically before settlement.

9. Central Tax Database for Individuals and Businesses

This unified system keeps:

• Your tax history

• Bank transaction patterns

• Property records

• Employment data

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• Business filings

• Lifestyle footprint

Reconciliation is now easier and faster.

What This Means for Nigerians

✔ Tax evasion will become very difficult

All systems share data, so gaps quickly show.

✔ Cash deposits will no longer hide income

Any unexplained inflow can trigger investigation.

✔ Businesses must keep proper records

E-invoicing and automated reporting will verify income.

✔ Compliance becomes easier (and cheaper) than evasion

It’s now safer to file honestly than to take risks.

Conclusion

Technology is transforming Nigeria’s tax landscape. With banks, BVN, NIN, CAC, property systems, and AI all linked, the new FIRS structure is built for transparency, automation, and accountability.

For individuals and businesses, the smartest move is simple:

Get registered, stay compliant, file your returns, and avoid penalties.