VAT Revenue Shared by FG, States, LGAs Rises to ₦7.73trn in 2025
Value Added Tax (VAT) allocations to the Federal Government, Nigeria’s 36 states and Local Government Areas surged to ₦7.73 trillion, up from ₦6.11 trillion in 2024, representing a significant 26.46% year-on-year increase in shared VAT receipts, according to data compiled from the Federation Account Allocation Committee (FAAC) and the Office of the Accountant-General of the Federation.
Experts and analysts emphasize that the jump in VAT allocations does not necessarily signal a broad-based surge in economic activity, but rather reflects the combined effects of inflationary pressures, higher import costs due to exchange rate fluctuations, and “improved tax collection”, particularly in major commercial centres.
From the total pool of ₦7.73 trillion, the Federal Government received about ₦1.16 trillion, further strengthening its share of non-oil revenue streams, while states shared roughly ₦3.77 trillion and LGAs took home about ₦0.71 trillion. Lagos State retained its position as the largest beneficiary by a wide margin, receiving around ₦459.87 billion, followed by Kano with ₦148.81 billion, Rivers with ₦137.38 billion, Oyo with ₦120.51 billion and Delta with ₦101.42 billion.
At the other end of the spectrum, states such as Taraba, Ebonyi, Yobe, Gombe and Zamfara each received allocations below ₦85 billion, highlighting persistent imbalances in the consumption tax base across regions.
The unusual month-by-month pattern of allocations, with October 2025 recording the highest monthly VAT disbursements while December was the lowest, was attributed not to a slump in consumer spending but to timing differences in VAT remittances.
At LGA level, the pattern mirrored that of states, with Lagos LGAs receiving ₦373.93 billion, Rivers LGAs ₦143.70 billion, Kano LGAs ₦141.07 billion, Oyo LGAs ₦120.51 billion, and Katsina LGAs ₦95.93 billion again showing that VAT receipts remain heavily concentrated in a few high-activity areas.
Economists and fiscal analysts underscore that while the rise in VAT allocations provides critical revenue support to all levels of government, especially at a time when statutory revenues and oil receipts face volatility, the increase is largely nominal, with inflation playing a major role in boosting the value of allocated funds rather than an underlying surge in productive economic output.
As Nigeria continues to seek fiscal sustainability and broaden its tax base, these VAT dynamics will remain central to policy debates around tax reform, revenue diversification and equitable development across the federation.
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