Nigeria’s Value Added Tax collections rose sharply in January, reaching N1.08 trillion as a revised revenue sharing structure commenced.
Figures presented at the February meeting of the Federation Account Allocation Committee showed that the Nigeria Revenue Service generated N1.08tn in January 2026, compared with N913.96bn recorded in December 2025, representing an 18.5 per cent increase.
However, deductions at source totalling N79.94bn reduced the distributable VAT to N1.00tn, higher than the N846.51bn shared in December.
January marked the first full month under the new allocation formula, which allocates 10 per cent of net VAT to the Federal Government, 55 per cent to states and 35 per cent to Local Governments. The revised structure replaced the previous 15-50-35 arrangement.
Under the updated model, the Federal Government received N100.32bn from the N1.00tn pool, while states shared N551.77bn and Local Governments received N351.13bn.
By comparison, under the former formula, the Federal Government would have earned about N150.48bn, indicating a reduction of roughly N50bn in its share under the new structure.
State governments, on the other hand, recorded higher allocations compared with what they would have received under the previous 50 per cent benchmark.
Beyond VAT receipts, total revenue available for distribution in January stood at N3.04tn. After deductions of N1.14tn, net distributable funds across revenue streams amounted to N1.90tn.
Combined allocations from statutory revenue and VAT placed the Federal Government’s total share at N525.23bn, states at N767.29bn, and Local Governments at N517.28bn, while derivation revenue stood at N90.19bn.
A breakdown by state indicated that Lagos State retained its leading position, generating N111.22bn in gross VAT and retaining N101.34bn after deductions, with its Local Governments receiving N70.57bn.
Oyo State followed with N24.04bn in gross allocation, while Rivers State posted N23.57bn. Kano State and the Federal Capital Territory were also among the top recipients.
Further data on non-import VAT showed a concentration of revenue generation, with Lagos accounting for more than half of the N913.47bn collected from local sources in January.
Collection costs also rose alongside increased revenue, as the four per cent charge by the Nigeria Revenue Service climbed to N43.33bn from N32.72bn in December.
Projections contained in the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper approved by the Federal Executive Council suggest that states could receive about N5.07tn in VAT allocations in 2026 under the revised arrangement.
