Finance Ministry Denies Scrapping “Cost-of-Collection” Deductions — Says No Policy Change After NDU Remarks

 The Federal Ministry of Finance has dismissed media reports claiming the Federal Government has ended the long-standing practice that allows revenue agencies to deduct “costs of collection” at source, saying the reports are “inaccurate and misleading.”

In a statement issued on October 8 and signed by Mohammed Manga, Director of Information and Public Relations, the Ministry said Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, did not announce or imply any change to the existing cost-of-collection arrangement during his remarks at the Nigeria Development Update (NDU) programme hosted by the World Bank. The Ministry stressed that the current framework remains in effect.

The clarification follows widespread reports — attributed to the Minister’s NDU appearance — that the government had directed agencies such as the Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to remit all revenue directly into the Federation Account without first retaining collection costs. Several national outlets had carried versions of the story, prompting rapid public debate.

While the Ministry refuted the immediate reports, it confirmed that policy discussions are ongoing. These talks, it said, are being held in line with directives from President Bola Ahmed Tinubu to review the structure of deductions — part of broader efforts to improve transparency, efficiency and value-for-money in public financial management. The Ministry emphasised that no final decision has been taken and that any reform will follow due process and stakeholder engagement.

The statement reassured stakeholders that revenue operations are continuing without interruption and warned media organisations to verify facts with official sources before publication to avoid unnecessary confusion. It said any future adjustments will be clearly communicated.

Background: The “cost-of-collection” mechanism has historically allowed revenue agencies to retain a portion of monies collected to cover operational expenses. Proposals to halt or reform that practice have significant fiscal implications because they affect how much is remitted to the Federation Account and, by extension, monthly FAAC distributions to states and local governments — which is why even speculative reports quickly attract public and political attention.

Federal Ministry of Finance press statement (Oct. 8, 2025); reporting by Premium Times, Punch and TheCable.