Nigeria’s Value Added Tax collections soared to a record N1.08 trillion in January, the first full month under the newly introduced VAT sharing formula that now favours state governments.
Findings by Spear News Nigeria revealed that total VAT earnings rose by 18.5 per cent from N913.96 billion recorded in December 2025, according to documents from the February Federation Account Allocation Committee meeting.
After deducting N79.94 billion at source, a net sum of N1.00 trillion was distributed among the three tiers of government.
This marked a significant increase from the N846.51 billion shared in December.
The distribution followed the newly approved formula, which allocates 10 per cent to the Federal Government, 55 per cent to state governments, and 35 per cent to local government councils.
Under the previous arrangement, the Federal Government received 15 per cent, states got 50 per cent, and local governments took 35 per cent. The change has resulted in a substantial redistribution of revenue.
From the N1.00 trillion net VAT shared in January, the Federal Government received N100.32 billion, a sharp decline from the N126.98 billion it would have collected under the old formula. This represents a shortfall of approximately N26.65 billion.
State governments emerged as the biggest beneficiaries, receiving a collective N551.77 billion. This compares favourably with the N423.25 billion they received in December, representing an increase of N128.52 billion or 30.4 per cent.
Local government councils also saw their allocation rise to N351.13 billion in January, up from N296.28 billion in the previous month, an increase of N54.85 billion.
Lagos State maintained its position as the dominant beneficiary, receiving a gross VAT allocation of N111.22 billion. After deductions, the state retained N101.34 billion, while its local governments collectively received N70.57 billion.
Oyo State ranked second with N24.04 billion in gross VAT allocation, followed closely by Rivers State with N23.57 billion. Kano received N17.37 billion, while the Federal Capital Territory, Abuja was allocated N15.76 billion.
Other top beneficiaries included Bayelsa with N15.07 billion, Katsina with N13.82 billion, Jigawa with N12.92 billion, Delta with N12.89 billion, and Kaduna with N12.73 billion.
At the lower end of the allocation scale, Ebonyi received N9.45 billion, Ekiti got N9.83 billion, Taraba took N9.37 billion, and Nasarawa was allocated N9.77 billion.
The cost of collection by the Nigeria Revenue Service, calculated at four per cent, rose to N43.33 billion in January from N32.72 billion in December, reflecting the increased VAT pool.
Notably, the Nigeria Customs Service recorded no import VAT cost of collection in January, compared with N3.84 billion in December, suggesting that recent tax reforms have consolidated revenue collection under the NRS.
Other statutory deductions included N31.20 billion to the North East Development Commission Project Account, representing three per cent, and N5.42 billion to the Revenue Mobilisation Allocation and Fiscal Commission at 0.5 per cent.
Total funds available for distribution across all revenue lines in January stood at N3.04 trillion. After total deductions of N1.14 trillion, the net distributable revenue came to N1.90 trillion.
When VAT and statutory revenue were combined, the Federal Government’s total allocation stood at N525.23 billion, while state governments received N767.29 billion. Local governments got N517.28 billion, and the 13 per cent derivation share amounted to N90.19 billion.
Economic analysts have called on state governments to exercise transparency in utilising their increased allocations.
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