VAT allocations shared by the Federal Government, states and local government areas (LGAs) rose sharply to N7.73 trillion in 2025, up from N6.11 trillion in 2024, representing a 26.46 per cent year-on-year increase.
The figures are based on Federation Account Allocation Committee (FAAC) data compiled by Nairametrics Research from the Office of the Accountant General of the Federation (OAGF).
Of the total VAT distributed in 2025, the Federal Government received N1.16 trillion, states shared N3.77 trillion, while LGAs received N0.71 trillion, reflecting the same 26.46 per cent growth across all three tiers of government.
The rise in VAT allocations was largely driven by higher prices, exchange-rate-induced import costs, and improved VAT compliance, particularly in major commercial centres, rather than a broad-based expansion in economic activity.
Monthly VAT distributions peaked in October 2025, while December recorded the lowest allocation, largely due to timing differences in VAT remittances rather than a drop in consumer demand.
The analysis covers FAAC VAT distributions from January to December 2025, based on nominal allocations rather than gross VAT collections.
Although VAT receipts grew strongly in 2025, the increase was mainly inflation-led. Consumption activity remains highly uneven, with a small number of states and urban centres accounting for a disproportionate share of VAT generation.
Overall, the data suggest improved efficiency in VAT collection, especially in economically active states, even as growth across the wider economy remains uneven.
Breakdown by Tier of Government
Federal Government
The Federal Government’s VAT allocation rose by 26.46 per cent in 2025. The highest monthly receipts were recorded in October (N121.89bn), February (N107.82bn) and June (N103.76bn), while January, March and December saw the lowest distributions.
States
States collectively received about N3.77 trillion in VAT allocations, with receipts heavily concentrated among a few dominant economies.
The top five states accounted for about N968 billion, roughly 28 per cent of total state VAT allocations:
- Lagos – N459.87bn: Over 12 per cent of total state allocations, reflecting its position as Nigeria’s main commercial hub
- Kano – N148.81bn: A major trading centre in northern Nigeria
- Rivers – N137.38bn: Supported by industrial and oil-related activity
- Oyo – N120.51bn: Boosted by sustained urban consumption
- Delta – N101.42bn: Driven by oil and services-sector activity
At the lower end, several states remained below N85 billion, including Taraba (N76.00bn), Ebonyi (N76.20bn), Yobe (N77.56bn), Gombe (N77.24bn) and Zamfara (N84.68bn).
The gap between Lagos (N459.9bn) and Taraba (N76.0bn) underscores the extreme concentration of VAT-generating activity and the continued dependence of many states on redistribution.
Local Governments
VAT allocations to LGAs followed a similar pattern of concentration, with a few states accounting for a large share of total receipts.
Top five states by cumulative LGA VAT allocations:
- Lagos – N373.93bn
- Rivers – N143.70bn
- Kano – N141.07bn
- Oyo – N120.51bn
- Katsina – N95.93bn
Bottom five:
- Gombe – N35.45bn
- Nasarawa – N36.13bn
- Bayelsa – N37.22bn
- Ebonyi – N38.21bn
- Taraba – N43.35bn
As with state allocations, LGA VAT receipts remain heavily skewed toward high-activity regions, reinforcing long-standing fiscal disparities at the sub-national level.
