Three Nigerian revenue-generating agencies – Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS), and Nigerian Upstream Petroleum Regulatory Commission (NUPRC), deducted N533.11bn as costs of revenue collection in the first seven months of 2024.
This marks a 99.85% increase from N266.75bn in the same period in 2023, according to reports from the Federation Accounts Allocation Committee (FAAC) published by the National Bureau of Statistics, (NBS).
FIRS claimed the largest share with N254.82bn, followed by NCS with N147.64bn, and NUPRC with N130.64bn.
The agency’s higher collection costs are likely due to the increase in import duty. While the surge may indicate intensified regulatory activities, it also highlights the effect of inflation and naira devaluation in boosting tax earnings. Also, the significant increase in the cost of revenue collection by the FIRS, NCS, and NUPRC has sparked calls for a review from state finance commissioners.
According to a recent Agora Policy report, the issue with the cost-of-collection arrangement is not just the agencies collecting more revenue, but the disproportionate allocation at the expense of states facing numerous challenges.
The rising costs have sparked calls for reform, with experts arguing the need for cost reductions to align with global best practices.