Nigeria’s Value Added Tax collections climbed to N2.28 trillion in the third quarter of 2025, the National Bureau of Statistics has disclosed, representing a 10.66 percent increase over the N2.06 trillion recorded in the second quarter of the same year and a significantly sharper 28.10 percent rise when measured against the corresponding period in 2024.
The figures are contained in the NBS Sectoral Distribution of VAT Q3 2025 report published on the bureau’s official website, offering one of the most detailed periodic snapshots of consumption and economic activity across Nigeria’s formal and semi-formal sectors.
According to the report, local VAT payments accounted for the largest portion of the total at N1.12 trillion, while foreign VAT payments contributed N680.23 billion. Import VAT, which reflects the levy applied at the point of entry on goods brought into the country, added N479.79 billion to the total figure. The three-component structure of VAT collection, spanning domestically generated transactions, foreign service payments, and border-level imports, reflects the layered architecture of Nigeria’s VAT administration under the Federal Inland Revenue Service.
“Value Added Tax (VAT) in Q3 2025 was N2.28 trillion, showing an increase of 10.66% on a quarter-on-quarter basis from N2.06 trillion in Q2 2025. Local payments stood at N1.12 trillion, foreign VAT payments were N680.23 billion, while import VAT contributed N479.79 billion in Q3 2025,” the NBS report stated.
The quarter-on-quarter growth across sectors was uneven, with some industries recording sharp expansions while others contracted noticeably. Administrative and support service activities posted the highest growth rate at 89.28 percent, followed by arts, entertainment and recreation at 82.49 percent, and human health and social work activities at 32.40 percent. These three sectors collectively suggest that service-oriented economic activity, particularly in professional administration and the wider entertainment and wellness space, is gaining taxable momentum.
On the other end of the spectrum, real estate activities recorded the steepest decline, contracting by 51.33 percent on a quarter-on-quarter basis. Activities of households as employers and undifferentiated goods and services-producing activities of households for their own use fell by 36.22 percent, while other service activities shed 20.30 percent. The NBS noted these figures without elaboration, though the real estate contraction, in particular, is consistent with widely reported pressures in Nigeria’s property market, including subdued transaction volumes amid high financing costs and inflationary conditions affecting purchasing power.
In terms of which sectors contributed the most to total VAT collected in Q3 2025, manufacturing held the top position with a 25.89 percent share, affirming that industrial production remains the single largest driver of consumption-linked tax revenue in the country. Information and communication followed at 18.77 percent, a figure that underlines the growing fiscal weight of Nigeria’s telecoms and digital services economy, a sector that has expanded substantially over the past decade through increased mobile penetration, data consumption, and digital financial services. Mining and quarrying ranked third at 14.85 percent, a reflection of the extraction sector’s continued role in formal economic activity, particularly given Nigeria’s hydrocarbon-linked supply chains.
At the lower end of the contribution scale, activities of households as employers and undifferentiated household production recorded the smallest share at just 0.003 percent, while activities of extraterritorial organisations and bodies, alongside water supply, sewerage and waste management, each contributed 0.03 percent. These figures are consistent with expectations, as household-level economic activity largely falls outside formal VAT capture, and water and waste services in Nigeria remain heavily public-sector-dominated with limited commercially taxable transactions.
The 28.10 percent year-on-year increase from Q3 2024 is significant in the broader context of Nigeria’s fiscal trajectory. The country has for years grappled with a revenue-to-GDP ratio that ranks among the lowest on the continent, a structural weakness that has constrained government spending capacity and widened the fiscal deficit. The federal government’s push to diversify non-oil revenue has consistently placed VAT at the centre of its strategy. The Finance Act 2020 raised the standard VAT rate from five percent to 7.5 percent, a move that was at the time projected to significantly boost collections. The downstream effect of that policy change, combined with inflation-driven increases in the nominal value of taxable transactions, has been reflected in the upward trend in VAT receipts visible in successive NBS quarterly reports.
Nigeria’s VAT framework distributes collected revenue across three tiers of government under a sharing formula. The federal government retains 15 percent, state governments receive 50 percent, and local government councils take 35 percent, with derivation adjustments applied to certain resource-producing states. This formula has made VAT revenue a critical fiscal lifeline for state governments, many of which depend on the monthly Federation Account Allocation Committee disbursements to fund recurrent expenditure, including salary payments.
The steady rise in VAT collections has, however, prompted recurring debates about equity and the burden that indirect taxation places on low-income Nigerians. Unlike income tax, which is theoretically progressive, VAT is a consumption-based levy that applies uniformly regardless of the purchaser’s income level, meaning that lower-income households pay the same rate on qualifying goods and services as wealthier consumers. This structural feature of VAT has long drawn scrutiny from economists and civil society groups who argue that its expansion without corresponding strengthening of direct tax systems and social safety nets deepens inequality.
The NBS publishes the sectoral VAT distribution report on a quarterly basis as part of its broader mandate to provide statistical intelligence for policy planning, budget formulation, and economic analysis. The Q3 2025 data covers the period from July to September and reflects transactions processed within that window across both private and public sector entities registered for VAT purposes with the FIRS.
