VAT Revenue Hits Record N1 Trillion as New Sharing Era Begins
By Erewunmi Peace
Nigeria’s Value Added Tax (VAT) revenue reached a record N1.08 trillion in January 2026, marking a historic milestone in the nation’s tax collection history. After statutory deductions, approximately N1.00 trillion was available for distribution among the Federal Government, state governments, and local councils.
The increase comes as the new VAT revenue-sharing formula takes effect.
Under this structure:
- The Federal Government now receives 10% of the distributable VAT, down from 15%.
- States will get 55%, up from 50%.
- Local Governments retain 35%, unchanged from the previous arrangement. According to reports, the January VAT figure represents an 18.5% month-on-month increase, the highest monthly collection recorded under the current system.
Officials say the revised sharing arrangement will boost states’ coffers, providing more funds for local development projects, while ensuring fairer distribution of national tax revenue.
The milestone underscores the growing efficiency of Nigeria’s tax administration and the potential of VAT as a critical source of internally generated revenue for all tiers of government.
