The three-revenue collection agencies for the federal, state and local governments withheld N657.99bn as cost of collection in the first six months of 2025, Daily Trust reports.

Analysis of the February to July FAAC documents sighted by Daily Trust showed the agencies which include the Federal Inland Revenue Service (FIRS), Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigeria Customs Service (NCS) got the money from the N13.68trn they collected within the months.

While the document did not state what each agency got, the agencies were given N107.786bn in the month of January while the figure reduced to N89.09bn in February.

It also dropped to N85.37bn in March but rose to N101.04bn in April, N111.90bn in May and N162.78bn in June.

Daily Trust reports that unlike other government agencies that remit revenue to the federal government when they have operating surplus, the three agencies are by law allowed to withhold a certain percentage of revenue they collected.

FIRS and NUPRC are allowed to keep four per cent as collection cost while the NCS is allowed to keep seven per cent.

Further breakdown of the amount of revenue collected by the agencies indicated that FIRS collected a total of N9.2trn with N2.29tr in January, N1.50trn in February, N1.42trn in March N2.50trn in April.

N1.91trn in May and N3.29tr in June.

For customs, it generated N2.01trn with N400.34bn in January, N299.58bn in February, N283.42bn in March, N400.34bn in April, N359.42bn in May and N315.29bn in June.

While NUPRC generated N2.44trn. it generated N566.1bn in January, N771.70bn in February, N618.27bn in March, N583.29bn in April, N615.12bn in May and N630.96bn in June.

FG’s move to review cost of collection deduction from revenue agencies

It would be recalled that the Federal Government ordered the Economic Management Team to review all deductions and revenue retention practices by Nigeria’s major revenue-generating agencies, in a bid to boost public savings, improve spending efficiency and unlock resources for growth.

The agencies include the Federal Inland Revenue Service, the Nigeria Customs Service, the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian Maritime Administration and Safety Agency, and the Nigerian National Petroleum Company Limited.

The President’s directive was disclosed to journalists by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.

According to Edun, President Tinubu specifically called for a reassessment of NNPC’s 30 per cent management fee and 30 per cent frontier exploration deduction under the Petroleum Industry Act.

He tasked the Economic Management Team, chaired by Edun, to present actionable recommendations to FEC on the optimal way forward.

The President said the directive was part of efforts to sustain reforms that have dismantled economic distortions, restored policy credibility, enhanced resilience, and bolstered investor confidence.

According to him, these reforms have created a transparent, competitive business environment attractive to local and foreign investors in critical sectors such as infrastructure, oil and gas, health, and manufacturing.

Also, stakeholders have raised the alarm over what they called an excessively high cost of revenue collection, which they say is not only denying the country much-needed funds to finance critical sectors of the economy but is also creating super agencies that are richer than some states of the federation.

A report by Agora Policy, a think tank group, raised the alarm that these agencies are collecting more money than most states in the country.

According to the report, the cost of collection for January 2024 shows that the FIRS retained N43.35 billion; Customs, N16.27 billion; and NUPRC, N18.68 billion.

Agora said no state government received a gross allocation as much as what FIRS got as cost of collection for the month.

It noted that the real mind-blowing part is that the amount received by the three federal agencies in January 2024 was higher than what each of four zones of the Federation got as gross allocation for the month.

It said the case of the NNPC and NIMASA is even worse because they only remit operating surpluses, meaning that what is left after they have finished spending is what they remit to the federation account

The immediate past Executive Chairman of FIRS, Mohammad Nami, in an interview, acknowledged that while estimating the exact amount the federation is losing due to deductions by revenue-generating agencies like NNPC and NIMASA may be difficult because it requires specific data and analysis, he noted that those deductions impact the nation’s revenue because some of the Revenue Generating Agencies (RGAs) have been underperforming.

He said some of them (unlike FIRS and Nigerian Customs) have been remitting only operating surplus to the government. In other words, while FIRS, Customs and NUPRC only enjoy between 4–7 per cent of the gross revenue generated by them, the rest of the RGAs remit ‘operating surplus.’

“The implication of this is that these RGAs generate, spend, and decide what to remit to the government for social services, critical infrastructure, and others,” he said.

While acknowledging the fact that the new NRS has the potential to streamline tax collection and improve revenue generation in Nigeria, he observed that the new agency will have to contend with some fundamental challenges, which include infrastructure and capacity gaps; coordination with state and local governments; as well as digitalization and tax compliance.

To address the above potential issues, Mr. Nami said that the implementation of a robust digital system will enhance tax collection, reduce leakages, and improve efficiency.