Nigeria Customs Service and 62 Other MDAs to Halt Direct Revenue Collection, Announces Presidential Committee
The Presidential Committee on Tax Policy and Fiscal Reforms has unveiled plans for the Nigeria Customs Service and an additional 62 Ministries, Departments, and Agencies (MDAs) of the Federal Government to discontinue their direct collection of revenue.
The Chairman of the Committee, Taiwo Oyedele, made this announcement during an appearance on Channels Television’s Sunrise Daily breakfast program on Wednesday.
Oyedele, a former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), clarified that the Federal Inland Revenue Service (FIRS) will now take over revenue collection for these MDAs. He emphasized that while Nigeria’s revenue collection from taxes is among the lowest globally, the cost of collection remains high.
He explained, “Ironically, our cost of collection is one of the highest. And the reason for that is that we’ve got all manners of agencies. The Federal Government alone, we have 63 MDAs that were given revenue targets last year, no; actually in the 2023 budget.”
Oyedele continued, “And two things that would come up from that: on one hand, these agencies are being distracted from doing their primary function which is to facilitate the economy. Number two, they were not set up to collect revenue, so, they won’t be able to collect revenue efficiently. So, move those revenue collection functions to the FIRS. It has two advantages: the cost of collection and efficiency will improve, these guys will focus on their work, and the economy will benefit as a result.”
When asked to elaborate on his remarks, Oyedele emphasized that these MDAs were not established to collect revenue on behalf of the federal government and should instead concentrate on their core responsibilities.
He said, “If you are Customs, focus on trade facilitation, border protection, and if you are the Nigerian Communications Commission (NCC), just regulate telecommunications. You are not set up to collect revenue. It can be your revenue and someone else can collect it for you. There will be more transparency because you see what is being collected and is accounted for properly. It is also a way of holding ourselves accountable for how we spend the money we collect from the people.”
Oyedele also addressed Nigeria’s tax gap, estimating it to be around N20 trillion. He highlighted that many members of the elite evade paying their rightful taxes to the government, and there is a need to address this issue to enhance revenue collection.
Additionally, it was reported on Tuesday that President Bola Ahmed Tinubu inaugurated a tax reforms committee, which includes Orire Agbaje, a 400-level Economics student from the University of Ibadan (UI), as a member.
Oyedele concluded by underscoring that the nation’s focus should be on major taxes such as Value Added Tax, Corporate Income Tax, and Personal Income Tax, as many individuals, particularly in the middle class and elite, are not fully tax compliant.
