The Nigerian Finance ministry has issued a categorical denial of recent reports suggesting that the Federal Government has discontinued the long standing policy allowing revenue-generating agencies to deduct their cost of collection at source, describing it as “inaccurate and misleading.” The ministry said in a statement late Friday.
Its long standing practice of collecting cost of collection allows these agencies to deduct their total expenditure incurred in generating revenue before sending the rest to the federation account.
The revenue generating agencies include: Federal Inland Revenue Service (FIRS), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigeria Customs Service (NCS). These are the top money generating agencies in Nigeria.
The clarification was prompted by widespread speculation following remarks made by the Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun.
In its statement the ministry firmly stated that at no point during the Nigeria Development Update (NDU) programme hosted by the World Bank did Minister Edun announce or imply any change to the existing policy on revenue deduction.
“For the avoidance of doubt, there has been no policy change regarding the deduction of costs of collection at source by revenue-generating agencies. The current framework remains in effect,” the statement read.
In August, the FIRS, NCS, NUPRC, generated ₦3.07 trillion Naira ($2.10 billion) to the federation’s statutory account, and FIRS ₦95.86 billion ($65.5million); NUPRC ₦28.92 billion($19.7million); NCS ₦27.89 billion($19million) – Were deducted by these respective agencies as cost of cost of collection.
While refuting the claims of a complete cancellation, the Ministry confirmed that the review of the cost of collection structure is an ongoing process, mandated by the Nigerian President Bola Ahmed Tinubu.
These discussions are part of a broader commitment by the administration to enhance transparency, efficiency, and ensure better value-for-money in public financial management. However, the Ministry stressed that the review has not culminated in any final decision or policy shift.
