Nigeria’s VAT Revenue Surges to N1.08 Trillion as New Sharing Formula Cuts FG Share

Nigeria’s Value Added Tax revenue has recorded a major jump, rising to N1.08 trillion in January 2026 from N913.96 billion in December 2025, according to documents from the Federation Account Allocation Committee. After deductions of N79.94 billion, net VAT stood at N1.00 trillion, reflecting a strong 18.5 per cent increase month-on-month.

January also marked the first full month under the revised VAT sharing formula. Under the new structure, the federal government's share dropped from 15 cent to 10 per cent, while states’ allocation increased from 50 per cent to 55 per cent. Local governments retained their 35 per cent share.

From the N1.00 trillion net VAT pool:
• The Federal Government received N100.32 billion
• States received N551.77 billion
• Local Governments received N351.13 billion

Under the old formula, the federal government would have earned about N150.48 billion, meaning a revenue shortfall of roughly N50 billion, while states gained significantly under the new arrangement.

The Nigeria Revenue Service handled VAT collections, with collection costs rising to N43.33 billion. Meanwhile, the Nigeria Customs Service recorded no import VAT collection cost in January.

Total FAAC distributable revenue reached N1.90 trillion, with Lagos State leading allocations at N101.34 billion, followed by Oyo State and Rivers State. States such as Ebonyi State, Taraba State, Ekiti State, and Nasarawa State received the least allocations.

What does this mean for Nigeria’s fiscal federalism, state finances, and federal revenue strength? We break down the numbers, the political implications, and what this revenue shift signals for 2026.

Stay with EnterpriseTV7 for trusted analysis and full economic breakdowns.

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