FG ends revenue deductions by agencies and orders full payment to federation account – THISAGE

By Victor Osula, Abuja

The federal government has announced sweeping tax reforms that end the long-standing practice of allowing revenue-generating agencies to keep a portion of the funds they raise.

This was revealed by the Minister of Finance and Coordinating Minister of Economy, Wale Edun while presenting the National Development Update, he directed that all revenues should henceforth be fully paid into the Federation account for distribution to federal, state and local governments.

Edun explained that the decision is part of the ongoing fiscal reforms aimed at improving the transparency, accountability and efficiency of public finances under the administration of President Bola Tinubu.

According to him, although Nigeria’s total revenue is increasing, a significant portion has historically been retained by agencies such as the Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) as “collection costs”.

“Funds have flowed into the Federation account, but the efficiency of that expenditure is paramount. We have been tasked by His Excellency the President to review deductions, not only those relating to collection costs, but deductions in general. Most of these deductions have now been removed once and for all,” he said.

Edun stressed that the Constitution requires that all revenues be paid into the Federation account before being shared among the three levels of government, adding that previous deductions have not resulted in visible national development.

He noted that the move would strengthen fiscal discipline and ensure that government spending delivers tangible results.

The Minister also spoke about ongoing social protection programs aimed at cushioning the effects of recent economic reforms. He said that while policy measures have temporarily increased the cost of living, mechanisms have been put in place to support vulnerable Nigerians.

“The promise was that they would not be left behind. We ensured that each beneficiary was biometrically and uniquely identified. By the end of October, we will have covered about 10 million families, reaching about 50 million Nigerians. By the end of the year, we expect to complete 50 million families,” he said.

The new policy effectively ends the system through which revenue agencies financed their operations. For example, the NUPRC had previously retained approximately 4% of royalties and rents collected on behalf of the Federation, while the FIRS had retained $254.82 billion in 2024 and was expected to receive $43.83 billion for the first half of 2025 in collection costs. Similarly, the NCS was allocated 7% of its takings before the agreement was replaced in August 2025 with a 4% Free on Board (FOB) levy on imports, following a directive from the House of Representatives.

Edun said the changes mark “a new era of fiscal discipline and transparency” in Nigeria’s public finance system.

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