VAT HITS RECORD N1TN AS NEW SHARING ERA BEGINS IN NIGERIA

The record-breaking figure comes as a new VAT sharing formula officially takes effect.

Nigeria’s Value Added Tax revenue surged to a historic high of over N1 trillion in January 2026. This marked a major milestone in the country’s non-oil revenue drive.

Data released at the Federation Account Allocation Committee meeting showed that VAT collections rose sharply compared to December 2025. This rise reflects improved compliance, stronger economic activity, and ongoing tax reforms. After statutory deductions, approximately N1 trillion was made available for distribution across the three tiers of government.

Under the new revenue-sharing structure, the Federal Government now receives 10 percent of net VAT revenue, down from 15 percent. State governments’ share has increased to 55 percent. Local governments retain their 35 percent allocation. Many of these states rely heavily on federal allocations to finance infrastructure, salaries, and social services.

With the revised formula, the Federal Government received just over N100 billion from the January VAT pool. Meanwhile, states collectively shared more than N550 billion. Local governments received above N350 billion. Under the previous structure, the Federal Government would have earned roughly N150 billion. This highlights the financial impact of the reform at the center.

Lagos State remained the highest beneficiary due to its strong economic base and high consumption levels. It received over N100 billion from the VAT distribution. Other economically active states such as Rivers, Oyo, Kano, and the FCT also recorded substantial allocations.

The new sharing era is part of broader fiscal reforms aimed at strengthening subnational governments and encouraging internal revenue generation. However, the reduced federal share may spark fresh debates about fiscal sustainability and the balance of power in Nigeria’s revenue framework.

As Nigeria continues to push for economic diversification away from oil dependency, the record VAT performance signals a growing reliance on tax-based revenue to support national development.

Urhobo daily.