KEY POINTS

• VAT allocations rose to ₦7.73 trillion in 2025, up 26.46% from ₦6.11 trillion in 2024.

• States received ₦3.77 trillion, with Lagos alone accounting for nearly ₦460 billion.

• Growth was driven mainly by inflation, higher prices, and better tax compliance, not broad-based economic expansion.

Value Added Tax, VAT, allocations to the Federal Government, states, and local government areas (LGAs) climbed to ₦7.73 trillion in 2025, up from ₦6.11 trillion in 2024, representing a 26.46 per cent year-on-year increase.

The figures are contained in data from the Federation Account Allocation Committee (FAAC), compiled by Nairametrics Research using records from the Office of the Accountant General of the Federation (OAGF).

Across the three tiers of government, the Federal Government received ₦1.16 trillion, states shared ₦3.77 trillion, while LGAs got ₦0.71 trillion from VAT in 2025.

The increase in VAT allocations reflects a combination of rising prices, exchange-rate-driven import costs, and improved tax collection, particularly in major commercial centres.

Analysts note that the growth does not necessarily signal a sharp expansion in economic activity, but rather the impact of inflation and better compliance by businesses.

Monthly VAT allocations peaked in October 2025, while December recorded the lowest disbursements, largely due to timing differences in remittances rather than weaker consumption.

The data covers FAAC VAT distributions for January to December 2025 and represents nominal allocations, not gross VAT collections.

Federal Government’s Share

The Federal Government’s VAT allocation rose by about 26.46 per cent year-on-year.

The highest monthly receipts were recorded in October (₦121.89 billion), February (₦107.82 billion), and June (₦103.76 billion). The lowest allocations occurred in December, January, and March.

States collectively received about ₦3.77 trillion in net VAT in 2025.

However, allocations remained heavily concentrated among a few economically dominant states, underscoring structural imbalances in Nigeria’s consumption base.

The top five recipient states shared roughly ₦968 billion, or about 28 per cent of total state VAT allocations:

• Lagos – ₦459.87 billion

• Kano – ₦148.81 billion

• Rivers – ₦137.38 billion

• Oyo – ₦120.51 billion

• Delta – ₦101.42 billion

At the lower end of the distribution:

• Taraba – ₦76.00 billion

• Ebonyi – ₦76.20 billion

• Yobe – ₦77.56 billion

• Gombe – ₦77.24 billion

• Zamfara – ₦84.68 billion

The gap between Lagos (₦459.9 billion) and Taraba (₦76.0 billion) highlights the extreme concentration of VAT-generating activity in a handful of states.

LGAs Receive ₦710bn, Lagos Tops List

Top five states by cumulative VAT allocations to LGAs:

• Lagos LGAs – ₦373.93 billion

• Rivers LGAs – ₦143.70 billion

• Kano LGAs – ₦141.07 billion

• Oyo LGAs – ₦120.51 billion

• Katsina LGAs – ₦95.93 billion

Bottom five states by cumulative LGA allocations:

• Gombe LGAs – ₦35.45 billion

• Nasarawa LGAs – ₦36.13 billion

• Bayelsa LGAs – ₦37.22 billion

• Ebonyi LGAs – ₦38.21 billion

• Taraba LGAs – ₦43.35 billion

The pattern of VAT distribution suggests that Nigeria’s consumption and commercial activity remains highly concentrated in a few urban and industrial centres.

While improvements in VAT collection are evident, the uneven spread of receipts indicates that economic growth remains patchy across the country, leaving many states structurally dependent on redistribution rather than locally generated consumption taxes.