Proforma Invoice (Nigeria)

A Proforma Invoice in Nigeria documents a transaction and the sum due, serving as proof of the charge or payment made.

In Nigeria's trade and commerce environment, the proforma invoice serves several critical functions. For import transactions, the Nigeria Customs Service (NCS) requires importers to submit a proforma invoice as part of the Form M application — the mandatory import document filed through the Trade Monitoring System (TRMS) managed by the Central Bank of Nigeria (CBN). The Form M application, governed by the CBN's Trade and Exchange Department circulars and the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (Cap F34, LFN 2004), requires an approved Form M before foreign exchange can be allocated for import payment. The proforma invoice provides the basis for the Form M application, stating the goods description, country of origin, FOB/CIF value in foreign currency, and the supplier's details.

For domestic trade, proforma invoices are used by Nigerian businesses as formal quotations submitted in response to requests for proposals (RFPs) or tenders — particularly in business-to-business sales of capital equipment, technology solutions, professional services, and bulk commodities. A proforma invoice that is accepted by the buyer through a purchase order forms the basis of a contract for sale under the Sale of Goods Act (Cap S1, LFN 2004).

For Value Added Tax (VAT) purposes, a proforma invoice is not a tax invoice and does not trigger the VAT self-accounting requirement. Under the Value Added Tax Act (Cap V1, LFN 2004) as amended by the Finance Acts 2019–2023, VAT at 7.5% becomes chargeable when a tax invoice is issued upon the supply of taxable goods or services. The proforma invoice may show an estimated VAT amount for the buyer's information, but the final VAT amount is determined by the commercial invoice.

For export transactions from Nigeria, exporters are required to obtain the appropriate export permits and comply with the Nigerian Export Promotion Council (NEPC) regulations. A proforma invoice is used in the early stages of export negotiation and may be required by the buyer's bank in the importing country to establish a letter of credit (LC) under Uniform Customs and Practice for Documentary Credits (UCP 600) issued by the International Chamber of Commerce (ICC).

Nigerian businesses — particularly SMEs — frequently use proforma invoices as a cash flow management tool, requiring advance payment or deposits from customers (typically 30–50% of the proforma value) before commencing production or procurement, with the balance payable on delivery against the final commercial invoice.

The legal framework governing the Proforma Invoice (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Proforma Invoice (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies and Allied Matters Act (CAMA) 2020 sets the foundational requirements.

A Proforma Invoice is required in Nigeria across a wide range of trade, commerce, and regulatory contexts.

A Proforma Invoice is needed when a Nigerian importer applies for a Form M through the CBN's Trade Monitoring System (TRMS) to obtain the foreign exchange allocation required to pay for imported goods. The Nigeria Customs Service and the CBN both require the proforma invoice to confirm the goods description, quantity, value, country of origin, and the supplier's details before the Form M is approved.

A Proforma Invoice is required when a Nigerian exporter is negotiating a sale with a foreign buyer and the buyer's bank requires a proforma invoice to establish a Letter of Credit (LC) under UCP 600 rules. The proforma invoice sets out the price, Incoterms (FOB Lagos, CIF Rotterdam, etc.), payment terms, and shipment schedule — all of which are incorporated into the LC.

A Proforma Invoice is needed when a Nigerian company is responding to a procurement tender issued by a government agency — such as the Bureau of Public Procurement (BPP) regulated entities — or a multinational corporation, and must submit a formal price quotation that can be accepted as a binding offer.

A Proforma Invoice is required when a Nigerian technology company, manufacturer, or service provider has agreed in principle with a buyer on the scope of work but wishes to confirm the pricing and payment terms in a formal document before issuing a final tax invoice that triggers VAT obligations under the VAT Act.

A Proforma Invoice is needed when a Nigerian business requires an advance payment or deposit from a customer — typically 30–50% of the total contract value — before commencing manufacturing, procurement, or service delivery. The proforma invoice serves as the formal document supporting the advance payment request.

A Proforma Invoice is required when a Nigerian company is shipping goods to a customer and needs a shipping document that can accompany the goods through customs clearance before the final invoice is issued — for example, in consignment sales or where the final quantity is subject to measurement at destination.

Parties in Nigeria should prepare a Proforma Invoice (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A valid Proforma Invoice for Nigerian businesses must contain the following essential elements.

Seller Details: Full legal name of the issuing company, CAC RC number, registered address, Tax Identification Number (TIN) issued by the Federal Inland Revenue Service (FIRS), and contact information. For VAT-registered businesses, the VAT registration number must be shown.

Buyer Details: Full legal name of the prospective buyer, address, and TIN if available. For Form M applications, the importer's registered address and CAC details are required.

Proforma Invoice Number and Date: A unique proforma invoice reference number and the date of issue. The proforma invoice number helps track the document through the sales cycle to the final commercial invoice and helps reconcile Form M applications.

Goods or Services Description: Detailed description of each item — product name, specifications, model/part number, HS (Harmonised System) tariff code for imported goods (required for Nigeria Customs Service classification), country of origin, quantity, unit of measurement, and unit price.

Pricing and Currency: Unit price and total value for each line item, subtotal, applicable VAT estimate at 7.5% (if the supply is taxable under the VAT Act), and total proforma value. Currency must be stated — NGN for domestic transactions, or foreign currency (USD, EUR, GBP) for import/export transactions. For CBN Form M applications, the value must be stated in the invoicing currency and the Naira equivalent.

Incoterms and Delivery Terms: For international trade, the applicable Incoterms 2020 rule (e.g., FOB Lagos Port, CIF Apapa, EXW Kano) must be stated. For domestic transactions, the delivery address and any freight/insurance costs should be specified.

Payment Terms: The payment structure — advance payment percentage, payment on delivery, letter of credit terms, or instalment schedule. For Form M transactions, state the payment method (Letter of Credit, Bills for Collection, or Pre-Payment).

Validity Period: The period for which the proforma invoice prices are valid — typically 30 to 90 days. After expiry, a revised proforma invoice should be issued to reflect any price changes.

Bank Details: The seller's bank account details for advance payments — bank name, account name, account number, and SWIFT/BIC code for international wire transfers. This supports the buyer in making advance payment deposits.

Notes and Disclaimers: A clear statement that the document is a proforma invoice (not a tax invoice), that VAT amounts are estimates only, and that a final commercial invoice will be issued upon confirmation of the order.

Anti-Money Laundering Compliance: A proforma invoice submitted to the Central Bank of Nigeria (CBN) Trade Monitoring System (TRMS) for a Form M application must accurately reflect the commercial terms — a false or inflated proforma invoice constitutes a predicate offence under the Money Laundering (Prevention and Prohibition) Act 2022 and may attract investigation by the Economic and Financial Crimes Commission (EFCC) under the EFCC (Establishment) Act 2004 or the Special Control Unit against Money Laundering (SCUML) under the Central Bank of Nigeria Act (Cap C4, LFN 2004). Importers whose Form M applications are based on fraudulent proforma invoices face sanctions from both the Nigeria Customs Service (NCS) and the CBN's Trade and Exchange Department.

VAT and Tax Compliance: Where the seller is registered for Value Added Tax (VAT) under the Value Added Tax Act (Cap V1, LFN 2004) as amended by the Finance Act 2020, the proforma invoice must display the seller's Tax Identification Number (TIN) and VAT registration number issued by the Federal Inland Revenue Service (FIRS). Non-resident digital service providers supplying services to Nigerian customers must register with FIRS under the simplified VAT registration regime introduced by the Finance Act 2021. Under Section 83 of the Evidence Act 2011 (Cap E14, LFN 2011), a proforma invoice accepted by the buyer and accompanied by a purchase order is admissible in evidence before the Federal High Court or State High Courts in a contract dispute.

Governing Law: The Proforma Invoice and the contract it evidences are governed by Nigerian contract law and, for the sale of goods, by the Sale of Goods Act (Cap S1, LFN 2004). Disputes are adjudicated by the State High Courts or Federal High Court, with appeals to the Court of Appeal and the Supreme Court of Nigeria under Sections 240 and 233 of the Constitution of the Federal Republic of Nigeria 1999. The Companies and Allied Matters Act 2020 (CAMA 2020) governs corporate parties through the Corporate Affairs Commission (CAC). Statutory Compliance Reference: The Proforma Invoice (Nigeria) is governed by Section 2 of the Value Added Tax Act No. 102 of 1993 (Cap No. 476, LFN 2004) as amended by Act No. 23 of 2021, which imposes VAT at 7.5 percent on taxable supplies. Section 83 of the Evidence Act No. 18 of 2011 (Cap No. 112, LFN 2004) provides that a proforma invoice accepted by the buyer is admissible in evidence before Nigerian courts. Section 22 of the Stamp Duties Act No. 41 of 1939 (Cap No. 411, LFN 2004) governs admissibility of stamped commercial documents. Section 15 of the Money Laundering (Prevention and Prohibition) Act No. 7 of 2022 prohibits the use of false invoices to conceal the proceeds of crime. Section 6 of the EFCC (Establishment) Act No. 1 of 2004 empowers the Economic and Financial Crimes Commission to investigate invoice fraud and trade-based money laundering. Section 8 of the Customs and Excise Management Act No. 55 of 1958 (Cap No. 84, LFN 2004) governs the customs valuation of imported goods on the basis of the commercial invoice. Section 24 of the Nigeria Data Protection Act No. 14 of 2023 requires a lawful basis for processing the buyer's personal and business data contained in the invoice. Section 307 of the Companies Act No. 1 of 2020 requires companies to retain commercial documents including proforma invoices for at least six years. Section 240 of the Constitution of the Federal Republic of Nigeria 1999 confers appellate jurisdiction on the Court of Appeal, and Section 233 vests final appellate jurisdiction in the Supreme Court of Nigeria. Forms-legal.com provides this template as a starting point for Nigeria-compliant trade documentation.