The Federal Government has unveiled plans to permanently discontinue deductions for the cost of revenue collection previously paid to agencies such as the Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), among others. This was disclosed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Wednesday in Abuja during a panel session following the launch of the October 2025 edition of the World Bank’s Nigeria Development Update, themed “From Policy to People: Bringing the Reform Gains Home.”
Edun explained that, in line with a presidential directive, several categories of deductions previously made before revenue distribution through the Federation Account Allocation Committee (FAAC) have now been abolished. The move, he said, is aimed at enhancing fiscal transparency, ensuring greater efficiency in public spending, and allowing more resources to reach the federal, state, and local governments. He noted that during the most recent FAAC allocation, most of such deductions had already been eliminated “once and for all.”
According to the minister, this reform is part of broader efforts to strengthen fiscal governance, promote accountability, and ensure more predictable and equitable revenue flows across all tiers of government. He further stated that the administration is reviewing all categories of deductions, including refunds and intervention funds, to guarantee that every naira collected is applied effectively toward national development priorities.
Edun emphasized that the government is aligning revenue management with constitutional provisions, which require that all collections flow into the Federation Account for subsequent distribution according to the approved sharing formula. He expressed optimism that these reforms will result in greater transparency, stronger fiscal discipline, improved funding for development, and a more sustainable public finance framework at all levels of government.
Under Nigeria’s fiscal system, agencies such as the FIRS and Customs have traditionally retained a percentage of revenues as a “cost of collection.” However, the practice has faced criticism for encouraging inefficiency and inflating administrative costs, thereby reducing the total funds available for distribution through FAAC. The new directive seeks to correct these inefficiencies and ensure that more public funds are directed toward governance and development outcomes.