FG SCRAPS CUSTOMS’ 7% REVENUE DEDUCTION FROM FAAC
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By Aishat Momoh. O.
The Federal Government, through the Federation Account Allocation Committee, has discontinued the long-standing seven per cent cost-of-collection deduction previously retained by the Nigerian Customs Service from Federation Account revenues.
The move effectively removes the agency from direct allocations of shared federal earnings.
An analysis of the FAAC report for February 2026, which reflects revenue generated in January, showed that the Customs Service no longer receives the seven per cent cost-of-collection previously deducted from the federation’s earnings.
The report indicated that the agency recorded ₦0.00 under the cost-of-collection category for January 2026, compared to ₦24.01bn received in December 2025.
However, other revenue-generating agencies continued to receive their statutory deductions. The Nigerian Upstream Petroleum Regulatory Commission received ₦21.44bn as a four per cent cost of collection, while the Nigerian Revenue Service got ₦44.16bn under the same category for January.
Findings revealed that the new arrangement was introduced under the Nigerian Customs Service Act, 2023.
Under the revised framework, the Customs Service is now funded through a statutory charge of at least four per cent of the Free-on-Board value of imports, rather than through deductions from the Federation Account.
The development marks a significant shift in the financing structure of one of Nigeria’s largest revenue-generating agencies and is expected to impact how federal revenues are distributed among the three tiers of government.
Confirming the change, the National Public Relations Officer of the Customs Service, Abdullahi Maiwada, said the agency no longer collects the seven per cent cost of collection from FAAC.
He explained that the new law provides a different funding model known as the Financing of the Customs Service, which is based on a percentage of import value.
“What we operate now is four per cent of the Free-on-Board value of imports under the financing arrangement for the service,” he said.
Maiwada added that FAAC distributions are strictly meant for the Federal Government, states, and local governments, noting that the Customs Service is no longer part of that sharing structure.
Further checks showed that the new funding model is backed by Section 18 of the Nigerian Customs Service Act, 2023, which outlines the sources of financing for the agency’s operations.
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