FG Ends Revenue Deductions by Agencies, Moves to Enforce Full Remittance to Federation Account
The Federal Government has announced an end to the long-standing practice of revenue-generating agencies retaining a portion of the funds they collect, saying the move is part of efforts to promote transparency and boost funds available for national and state development.
Speaking yesterday in Abuja during the launch of the National Development Update, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the government has officially stopped all cost-of-collection deductions by agencies such as the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Edun explained that although Nigeria’s gross revenue has continued to grow, a large share of it was being deducted by these agencies before it reached the Federation Account. He noted that President Bola Ahmed Tinubu has ordered a full review of such deductions as part of a broader fiscal reform agenda.
“Funds have flowed to the Federation Account, but the efficiency of that spending is critical,” Edun said. “We have been mandated by His Excellency, the President, to take a look at deductions — not just for the cost of collection, but deductions in general.”
The minister pointed out that these deductions have greatly reduced the actual amount available for distribution to the federal, state, and local governments.
“When you look at the gross figure, you see all kinds of deductions before getting to the net distributable figure,” he explained. “I must inform you that even during the last FAAC allocation, most of those deductions have been removed once and for all.”
Edun stated that the government is now enforcing the constitutional requirement that all revenues must first be paid into the Federation Account before being distributed according to the approved formula.
“The Constitution is clear — funds must flow from revenue-collecting agencies into the Federation Account and be shared accordingly. That is exactly what we are now doing,” he said.
He added that the government’s fiscal reforms are centered on transparency, accountability, and efficient resource allocation to drive development across all levels of government.
Until recently, the Nigeria Customs Service received a seven per cent cost of collection from the Federation Account. However, in August 2025, this was replaced with a four per cent Free on Board (FOB) levy on imports, as directed by the House of Representatives.
The new levy now serves as the main source of funding for Customs operations.
