FG ends Customs’ 7% FAAC deduction coverage

The Federal Authorities, by way of the Federation Account Allocation Committee, has discontinued the long-standing seven per cent cost-of-collection deduction beforehand retained by the Nigerian Customs Service from Federation Account revenues, a transfer that successfully removes the company from direct allocations of shared federal earnings, The PidomNigeria has gathered.

An evaluation of the Federation Account Allocation Committee report for February 2026, which captured income generated in January, indicated that the Customs Service now not receives the seven per cent cost-of-collection beforehand deducted from the federation’s earnings.

The road merchandise that normally signifies the quantity obtained as price of assortment confirmed that the Nigerian Customs Service recorded N0.00 for January 2026, a pointy distinction to the N24.01bn it obtained beneath the identical class in December 2025.

The report, nevertheless, indicated that different revenue-generating companies continued to obtain their statutory deductions, with the Nigerian Upstream Petroleum Regulatory Fee receiving N21.44bn as a 4 per cent price of assortment, whereas the Nigerian Income Service obtained N44.16bn as a 4 per cent price of assortment for the month of January.

Our correspondent additional gathered that the brand new association was launched by the Nigerian Customs Service Act, 2023.

The service is now funded by way of a statutory cost of not less than 4 per cent of the Free-on-Board worth of imports quite than by way of the Federation Account sharing system.

The event marks a significant shift within the financing construction of one in all Nigeria’s largest revenue-generating companies and is predicted to have an effect on how federal revenues are distributed among the many three tiers of presidency.

Confirming the change in an interview with our correspondent, the Nationwide Public Relations Officer of the Nigerian Customs Service, Deputy Controller Abdullahi Maiwada, stated the company now not collects the seven per cent price of assortment from the Federation Account.

Maiwada defined that the brand new legislation governing the service supplies a special funding mannequin often known as the Financing of the Customs Service, which relies on a share of import worth quite than deductions from federally shared revenues.

The officer stated, “Please verify the Nigerian Customs Service Act of 2023. What we function now’s 4 per cent of the Free-on-Board worth of imports beneath the financing association for the service.

“That’s what we use to run the service. So that you shouldn’t anticipate any allocation from FAAC to the Nigerian Customs Service as a result of we now not acquire the seven per cent surcharge as the price of assortment.

“What we acquire now’s the Financing of the Customs Service, which relies on 4 per cent of the Free-on-Board worth of imports. So you shouldn’t anticipate any allocation from the FAAC sharing committee.

“The FAAC distribution is completely for the three tiers of presidency: the Federal Authorities, the states, and the Native Governments. The Nigerian Customs Service just isn’t a part of that sharing association anymore.”

The PidomNigeria additionally gathered that the funding mannequin is backed by Part 18 of the Nigerian Customs Service Act, 2023, which outlines the sources of financing for the service’s operations.

The legislation supplies that the Customs Service shall be funded by way of not lower than 4 per cent of the Free-on-Board worth of imports, revenues derived from cost-based consumer charges, authorities budgetary allocations the place relevant, in addition to grants and donations from growth companions.

The Act additionally empowers the President to suggest a rise within the 4 per cent cost, topic to approval by the Nationwide Meeting, if the governing board of the service presents verifiable and compelling causes.

The brand new financing construction aligns Nigeria’s customs operations with worldwide finest practices, the place customs administrations are funded by way of statutory prices linked to commerce volumes quite than deductions from nationwide income swimming pools.

Out there information from the FAAC report confirmed that the Nigerian Customs Service generated N282.83bn in income in 2025, making it one of many largest contributors to the Federation Account alongside the NRS and the NNPC.

The company is chargeable for accumulating import duties, excise duties, and different trade-related taxes on behalf of the Federal Authorities. Customs revenues represent a significant element of Nigeria’s non-oil revenue, particularly as the federal government continues efforts to scale back reliance on crude oil receipts.

In the meantime, state commissioners of finance have known as for a periodic evaluate of cost-of-collection preparations throughout revenue-generating companies, warning that top deductions by some companies may considerably cut back the funds out there for distribution to the three tiers of presidency.

The priority was raised throughout deliberations on the Federation Account Allocation Committee assembly and said in a communique issued on the finish of a three-day committee retreat in Enugu State.

In response to a piece of the FAAC doc obtained by our correspondent, individuals famous that top assortment prices by some income companies had turn into a significant drain on the Federation Account.

The doc said, “The excessive price of income assortment by sure companies was recognized as a significant drain on the Federation Account. Contributors resolved that cost-of-collection preparations must be reviewed periodically, benchmarked towards worldwide finest practices, and linked to effectivity and efficiency outcomes.”

Finance commissioners from a number of states reportedly emphasised that income companies should function beneath clear and performance-based price constructions to make sure that the majority of collected revenues move into the Federation Account.

The elimination of the seven per cent deduction by the Nigerian Customs Service may probably enhance the web income out there for distribution among the many Federal Authorities, states, and native governments.

Underneath the earlier association, revenue-generating companies comparable to Customs deducted a share as the price of assortment earlier than remitting the steadiness into the Federation Account for sharing.

The shift to the 4 per cent Free-on-Board import cost means the Customs Service now funds its operations independently of the month-to-month FAAC distribution course of, however the monetary earnings of the service are now not clear.

Nevertheless, analysts be aware that the total fiscal affect of the change will rely upon commerce volumes and the general worth of imports, which decide the Free-on-Board prices collected by the service.

The event additionally comes amid rising scrutiny of income assortment mechanisms in Nigeria as the federal government seeks to enhance fiscal transparency and maximise revenue to fund nationwide growth programmes.