The Federal Capital Territory (FCT) and Nigerian states are poised to receive N92.8 billion in withholding taxes following a reconciliation exercise involving revenue agencies. The Federation Account Allocation Committee (FAAC) approved the recommendation after complaints from some states that withholding taxes collected on their behalf were being deposited into the Federation Account without proper reconciliation.
According to the FAAC Post-Mortem Sub-Committee report for February 2026, the states approached the committee and the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) to review outstanding withholding taxes collected by the Federal Inland Revenue Service (FIRS), now operating as the Nigeria Revenue Service (NRS).
To resolve the issue, RMAFC engaged SMD Consulting to reconcile records with the NRS. The consultancy confirmed that N92.8 billion is due to the states and FCT as refunds, with the amount to be paid after deducting the agreed consultancy fee.
The report also provided updates on other financial reviews, including the 30 percent deductions by the Nigerian National Petroleum Company Limited (NNPC Ltd) for frontier oil exploration. An ad-hoc FAAC committee plans site visits to verify the projects and ensure transparency and accountability.
Revenue data for December 2025 showed a total of N2.6 trillion available for distribution from the Federation Account. The largest contributions came from the NBS VAT account (N913.96 billion, 35.35%), the NBS (N685.90 billion, 26.53%), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) with N593.11 billion (22.94%). The Nigeria Customs Service contributed N342.94 billion (13.26%), while the NRS Electronic Money Transfer Levy added N39.9 billion. NNPC Ltd contributed N9.79 billion, or 0.38% of the total.
The report highlighted that N4.17 billion was generated from the solid minerals sector in December 2025, with a cumulative balance of N68.14 billion as of November 2025. Updates were also provided on Project Gazelle, a $3.3 billion crude oil-backed financing initiative by NNPC Ltd arranged by Afreximbank. Between April 2024 and December 2025, N5.7 trillion was disbursed from the Project Gazelle escrow account, with N2.115 trillion going to NUPRC and N3.561 trillion to NBS, before distribution to the three tiers of government.
FAAC directed agencies to provide detailed records of actual dollar payments and outstanding balances under Project Gazelle to determine when the loan will be fully repaid.
Other reviews include the Road Infrastructure Tax Credit Scheme, which allows companies to fund road projects in exchange for tax credits. A consultant is expected to submit findings to the FAAC committee before the final report.
The FAAC report also addressed allegations that NNPC Ltd may have under-remitted about $42.4 billion. Both NNPC Ltd and Periscope Consulting were asked to reconcile their records. While NNPC maintains it owes nothing, the sub-committee directed ongoing discussions before the next FAAC meeting.
Currently, N707.2 billion in revenue is under reconciliation, including N480.74 billion between NUPRC and NNPC Ltd, N225.42 billion between NBS and NNPC Ltd, and ₦1.03 billion with NNPC Ltd directly. Unresolved payments dating back before June 2023 have been referred to a stakeholders alignment committee, with the second phase of reconciliation extending to December 2024.
FAAC officials emphasized that these ongoing reviews aim to ensure greater transparency and accountability in the management and distribution of funds from the Federation Account.
