FG Ends Cost-of-Collection Deductions, Orders Full Revenue Remittance To FAAC

The Federal Government announced yesterday that revenue-generating agencies will no longer be allowed to retain a portion of the funds they collect. This marks the end of the long-established practice of making deductions for the cost of revenue collection.

The government has indicated that this action is designed to enhance fiscal transparency and guarantee that increased financial resources are accessible for both national and local governments.

Yesterday in Abuja, Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, made this statement during the unveiling of the National Development Update

He clarified that although Nigeria’s total revenue has shown an upward trend, a significant amount of these earnings has been withheld to cover collection expenses by organizations like the Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

Edun mentioned that despite these deductions, there hasn’t been a noticeable impact on national development. He explained that reviewing these deductions is a component of a comprehensive fiscal reform initiative directed by President Bola Tinubu.

He said, “Funds have flowed to the Federation Account, but the point is this efficiency of that spending is critical.

“We have been mandated by His Excellency, Mr. President, to take a look at deductions, not just those for the cost of collection, but deductions generally.

“When you look at the gross figure, you see all kinds of deductions before you get to the net distributable figure, which goes to the federal, state, and local governments.

“And I must inform you that even during the last FAAC allocation, most of those deductions have been removed once and for all.

“The Constitution says that funds should flow from revenue-collecting agencies into the Federation Account and be distributed according to the set formula, and that is what is now being done.”

The minister also highlighted the current initiatives in social protection, emphasizing their key role in President Tinubu’s Renewed Hope Agenda. He recognized that economic reforms have temporarily increased the cost of living, resulting in short-term difficulties. However, he reassured that there are strategies to safeguard the most vulnerable Nigerians.

He said, “The promise was that they would not be left to their own; they would not be left behind.

“We made sure that each person who benefits is biometrically and uniquely identified by name.

“Kudos to the management of the Nigerian Identity Management Company.

“Once we had put in place the right technology and methodology, the programme took off.

“We are still implementing the first stage of the social safety net, the direct benefit transfers.

“By the end of October, we will have covered about 10 million households, reaching 50 million Nigerians.

“Long before the end of the year, the commitment is to have completed 50 million households.”

The government is now aiming to terminate the system that has traditionally acted as a funding method for revenue-generating entities. For instance, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) keeps approximately four percent of the royalties, rents, and other income it gathers for the Federation Account.

In a similar manner, the Federal Inland Revenue Service (FIRS) retained N254.82 billion in 2024 and is expected to obtain N43.83 billion for the first half of 2025 as a cost for collection.

Up until recently, the Nigeria Customs Service (NCS) was allocated seven percent of the cost of collection from the Federation Account. However, as of August 2025, this arrangement was replaced with a four percent Free on Board (FOB) levy on imports, as directed by the House of Representatives. This new levy now acts as the main funding source for Customs’ activities.