In 2025, VAT allocations to the Federal Government, States, and Local Government Areas (LGAs) rose to N7.73 trillion, up from N6.11 trillion in 2024, representing a 26.46% year-on-year increase.
This is according to the Federation Account Allocation Committee (FAAC) data compiled by Nairametrics Research from the office of the Accountant General of the Federation (OAGF).
Across the three tiers, VAT receipts grew by 26.46%, with the Federal Government receiving N1.16 trillion, States N3.77 trillion, and LGAs N0.71 trillion.
The increase reflects a combination of higher prices and improved VAT collection, particularly in major commercial centres.
Monthly allocations peaked in October 2025, while December recorded the lowest disbursements, largely due to timing differences in VAT remittances rather than a decline in underlying consumption.
This analysis is based on FAAC VAT distributions for January–December 2025, regardless of the underlying revenue generation period, and reflects nominal VAT allocations, not gross collections.
What the data is saying
The rise in VAT allocations in 2025 mainly reflects higher prices and better tax collection, not a sudden boom in economic activity.
However, VAT receipts increased by 26.46% from 2024, much of the growth came from inflation, higher import costs due to exchange rate changes, and improved compliance by businesses, especially in major commercial centres.
The concentration of VAT receipts around specific months and regions highlights the uneven nature of Nigeria’s consumption base, with a few states and urban centres accounting for a disproportionate share of VAT-generating activity.
Overall, the data suggest that the government is collecting VAT more efficiently, particularly in economically active states, but economic growth remains uneven across the country.
Allocation across the three levels of government
Federal allocation in 2025
The Federal Government’s VAT allocation in 2025 increased by about 26.46% year-on-year. The highest allocations were recorded in October (N121.89 billion), February (N107.82 billion), and June (N103.76 billion), while December, January, and March saw the lowest distributions.
Statesallocation in 2025
In total, approximately N3.77 trillion in net VAT was distributed to states in 2025.
However, allocations were heavily concentrated among a small number of economically dominant states, reinforcing long-standing structural imbalances in Nigeria’s consumption base.
The top five recipient states collectively received about N968 billion, accounting for roughly 28% of total VAT allocations to states.
- Lagos – N459.87 billion: Retained its position as the largest recipient, accounting for over 12% of total state VAT allocations, reflecting its role as Nigeria’s primary commercial and consumption hub.
- Kano – N148.81 billion: Ranked second, highlighting its importance as a major trading and consumption centre in northern Nigeria.
- Rivers – N137.38 billion: Benefited from strong industrial and oil-linked commercial activity.
- Oyo – N120.51 billion: Crossed the N120 billion threshold, supported by sustained urban consumption.
- Delta – N101.42 billion: Completed the top five, underpinned by oil-related and service-sector activity.
At the lower end, several states remained clustered below the N85 billion mark.
- Taraba – N76.00 billion
- Ebonyi – N76.20 billion
- Yobe – N77.56 billion
- Gombe – N77.24 billion
- Zamfara – N84.68 billion
The wide gap between Lagos (N459.9bn) and Taraba (N76.0bn) highlights the extreme concentration of VAT-generating activity, with many states remaining structurally dependent on redistribution rather than internally generated consumption taxes.
Local Government Areas (LGAs)allocation in 2025
VAT allocations to Local Government Areas (LGAs)
VAT allocations to LGAs in 2025 also displayed significant geographic concentration, mirroring state-level patterns. A small group of states accounted for a disproportionately large share of cumulative VAT allocations to their LGAs, reflecting where commercial and consumer activity is most intense.
Top 5 states by cumulative VAT allocations to LGAs
- Lagos LGAs – N373.93 billion: The highest nationwide, driven by dense commercial clusters and service-sector dominance.
- Rivers LGAs – N143.70 billion: Supported by oil-linked industrial activity and urban consumption.
- Kano LGAs – N141.07 billion: Reflecting its role as a regional trade hub.
- Oyo LGAs – N120.51 billion: Benefiting from sustained urbanisation and services growth.
- Katsina LGAs – N95.93 billion: Completing the top five, supported by population size and trading activity.
Bottom 5 states by cumulative VAT allocations to LGAs
- Gombe LGAs – N35.45 billion
- Nasarawa LGAs – N36.13 billion
- Bayelsa LGAs – N37.22 billion
- Ebonyi LGAs – N38.21 billion
- Taraba LGAs – N43.35 billion
As with state allocations, LGA-level VAT receipts remain heavily skewed toward a few high-activity regions, reinforcing fiscal disparities at the sub-national level.
