Nigeria’s VAT Collections Rise to N2.42 Trillion in Q1 2026

Nigeria’s Value Added Tax (VAT) revenue surged to N2.42 trillion in the first quarter of 2026, marking a 17.06% increase compared with the N2.07 trillion generated during the same period in 2025.

The data, released by the National Bureau of Statistics (NBS), also shows a quarter-on-quarter growth of 9.98%, reflecting stronger tax compliance and increasing economic activity across several sectors.

Breakdown of VAT Revenue

According to the NBS, the total VAT collected included contributions from local payments, foreign VAT, and import VAT, demonstrating the diverse sources of this critical non-oil revenue. This performance underscores the government’s growing capacity to mobilise resources beyond oil-dependent streams.

Sectoral Performance

Different sectors contributed unevenly to the VAT total. Activities of households as employers and as undifferentiated goods-and-services producers for own use experienced the strongest growth, surging by over 70%. The arts, entertainment, and recreation sector followed with double-digit growth, while manufacturing recorded a solid increase in its VAT contribution.

Some sectors, however, experienced declines. Education posted the steepest drop, and public administration and defence, including compulsory social security, also saw significant reductions. Activities of extraterritorial organisations and bodies declined as well, reflecting sector-specific challenges in VAT generation.

Leading Contributors

Despite fluctuations across sectors, the manufacturing industry remained the largest contributor to VAT revenue, followed by the information and communication sector, highlighting the growing importance of digital and telecommunications services in Nigeria’s economy.

Mining and quarrying also accounted for a notable share, while households, extraterritorial organisations, and water and waste management activities contributed minimally to the overall collections.

Policy and Reform Context

VAT has become a cornerstone of Nigeria’s efforts to diversify its revenue base and reduce dependence on crude oil. In June 2025, President Bola Tinubu signed four landmark tax reform bills into law, which came into effect in January 2026. These reforms modernised tax administration, improved revenue mobilisation, and set the stage for stronger compliance across sectors.

The federal government also introduced new presumptive tax rules for Micro, Small, and Medium Enterprises (MSMEs) in March 2026. The initiative is designed to simplify compliance and encourage the formalisation of small businesses, further supporting VAT growth and broadening the non-oil revenue base.

Implications for the Economy

The 17% year-on-year increase in VAT collections indicates that Nigeria’s non-oil revenue base is expanding, providing additional resources for government expenditure, fiscal management, and economic stability. Sustained VAT performance, particularly in manufacturing, telecommunications, and mining, signals resilience in key sectors and an improving landscape for revenue mobilisation.