The Federal Government has initiated a comprehensive review of the existing cost-of-collection framework used by major revenue-generating agencies in a move aimed at enhancing transparency, efficiency, and accountability in public financial management.
The review, which targets institutions such as the Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), seeks to determine whether the current practice of deducting cost of collection at source still aligns with government’s fiscal reform objectives.
Under the existing system, these agencies are allowed to retain a percentage of the revenue they collect on behalf of the Federation as operational costs before remitting the balance to the Federation Account.
While this model was initially designed to incentivise revenue generation, critics have argued that it encourages inefficiency, limits transparency, and creates room for financial leakages.
Confirming the policy discussions, the Federal Ministry of Finance, clarified that the review is in line with the directive of President Bola Ahmed Tinubu to improve value-for-money outcomes in government operations.
‘What is underway are ongoing policy discussions in line with the directives of His Excellency, President Bola Ahmed Tinubu, to review the cost-of-collection structure. These discussions are part of broader efforts to enhance transparency, efficiency, and value-for-money in public financial management. However, no final decision has been made on this matter,’ the Finance Ministry said.
The ministry emphasised that there has been no policy change regarding the current practice, and revenue-generating agencies should continue to operate under the existing framework.
It further assured stakeholders that any eventual adjustments will follow due process and involve extensive consultations with relevant institutions to avoid disruptions in revenue operations.
‘The current framework remains in effect,’ the Ministry stressed, adding that future reforms will be guided by transparency, stakeholder engagement, and clear communication to ensure smooth implementation.
The proposed review aligns with the administration’s broader fiscal reforms designed to strengthen Nigeria’s revenue base, minimize wastage, and ensure that every naira generated delivers maximum public value.