Nigeria's VAT Allocations Soar to N7.73 Trillion in 2025, Driven by Improved Collection and Compliance

VAT allocations in Nigeria reached N7.73 trillion in 2025, showing a significant increase from the previous year. The Federal Account Allocation Committee (FAAC) data revealed that VAT receipts grew by 26.46% year-on-year.

The Federal Government received N1.16 trillion, states received N3.77 trillion, and LGAs received N0.71 trillion. The rise in allocations was driven by a combination of higher prices, improved VAT collection, especially in major commercial centers, and better tax compliance.

The increase in VAT receipts by 26.46% in 2025 compared to 2024 was mainly due to higher prices and improved tax collection rather than a sudden economic boom. The VAT distribution across the three levels of government highlighted the uneven nature of consumption patterns in Nigeria, with a few states and urban centers contributing disproportionately to VAT generation.