The sum of N5.244 trillion accrued into the federation account between January and June, 2023 as captured in the monthly report to the Federation Account Allocation Committee (FAAC) domiciled in the Central Bank of Nigeria (CBN) under the caption “CBN Federation Account Component Statement.”
Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) Mr. Mohammed Bello Shehu made the disclosure yesterday in a statement he issued in Abuja.
Mr Shehu said out of the total gross revenue inflows into the federation account, the sum of N627.3 billion was the NNPC JV petroleum profit tax due, captured and recorded by the FIRS, but utilised by the NNPC for other government obligations.
From the reports, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) remitted the sum of N823.512 billion while the FIRS made a gross collection of N3.655 trillion, but remitted N3.1 trillion, retaining the difference as cost of collection.
The statement further disclosed that Nigeria Customs Service (NCS) on its part remitted the sum N764.6 3 billion.
It however, added that NNPC did not remit any amount into the federation account during the period either as profit revenue or other revenues as contained in the Petroleum Industry Act (PIA), 2021 as its revenue performance could not be assessed because neither its revenue target was disclosed nor its revenue remittance to the federation account was provided.
The statement that was issued yesterday revealed that the sum of N1.49 trillion was realised as Value Added Tax (VAT) while the sum of N83 billion was realised from electronic money transfer levy from which the sum of N3.32 billion was paid to FIRS as cost of collection.
In detail, FIRS received the sum of N82 billion and another N3.32 as cost of collection on petroleum profit tax, company income tax and electronic money transfer collections respectively in the period. The report revealed that on VAT, the FIRS and NCS both took the sum of N59.59 billion as cost of collection within the period under review.
Similarly, the report indicates that the sum of N16.68 billion was realised from the solid minerals sector.
The RMAFC chair further revealed that total collections from VAT netted the sum of N1.387 trillion which was shared to the three-tiers of government in accordance with the approved VAT sharing formula.
“Furthermore, the sum of N1.117 billion was paid in the month of March, 2023 as Consultancy Fee on VAT,” the RMAFC chairman said.
On the statutory allocations to the three tiers of government, Mr. Shehu disclosed that the net sum of N3.069 trillion was shared to the 3-tiers of government in the period January to June, 2023.
A breakdown of the figures on cost of collection by revenue generating agencies of the government showed that Nigeria customs got N53.524 billion while the NUPRC received the sum of N33.961 billion within the six months period.
In the same vein, the statement added that the sum of N48.105 billion was paid to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). “This money was collected by NUPRC as penalties on gas flared.
Revenues on gas flared penalty used to be Federation Account revenues before the PIA, 2021 which provided that such revenues should be paid 100 percent to the NMDPRA,” he stated.
The RMAFC chair described the statutory deductions which constituted 32.27 percent of the total gross inflow into the federation account in the six month period as superfluous and constitute a drain on the federation account.
Mr. Shehu also disclosed that the sum of N1.692 trillion was deducted at source by the Office of the Accountant-general of the Federation as approved statutory deductions; with a further deduction of the sum of N70 billion by the FIRS under the name of FIRS priority projects in the second quarter.
The chairman said that the Nigerian economy at the moment requires some pragmatic measures to enhance distributable revenues for the three tiers of government for the overall development and growth of the country.
According to the statement, the commission made recommendations on the operations and management of the federation account with particular reference to: payment of cost of collection to revenue generating agencies which it said should be tied to revenue performance where each agency should receive cost of collection commensurate to the revenue generated against its revenue target in the Appropriation Act.
RMAFC said there is need for the government to review the payment of 100 percent (less cost of collection) revenue realised from gas flared penalty to the NMDPRA as gas flared penalty was hitherto a federation account revenue component taken over by the PIA, 2021.
Other recommendations include the need to review, holistically, all legislations with respect to statutory deductions to allow for increase in the amount to be shared among the three-tiers of government; greater emphasis on the Solid Minerals sector to improve revenue generation therefrom and further achieve economic diversification.
“No further deduction should be made by FIRS in the name of ‘priority projects’ to avoid a repeat of the situation under NNPC where large chunk of funds were deducted as first line charge under similar name, i.e. ‘NNPC priority projects’; and all accruals due on 13 percent derivation should be deducted as at when due to avoid refunds in future.
“This is to guarantee accountability, probity and transparency in the management of the Federation Accounts and disbursements to the 3-tiers of government,” Shehu said.
To this end, the commission also recommend that all NNPC JV PPT should be paid to the federation account through FIRS, i.e. such taxes should not be retained by the company in the name of financing federal government priority projects; and NNPC should be made to remit promptly all revenues due to the federation account as at when due in compliance with the provisions of the PIA, 2021.
