Nigeria’s Value Added Tax (VAT) collection has recorded a sharp decline for the third consecutive month, raising concerns about the sustainability of increased allocations at various levels of government.
Official FAAC figures show VAT revenue fell from £872.63bn in September 2025 to £719.827m in October, before falling further to £485.838m in November. The FAAC statement of November 2025 revealed that the distributable income from the Federation Account comprised ₦485.838 billion from VAT and ₦39.646 billion from Electronic Money Transfer Tax (EMTL). October’s gross VAT receipts of £719,827 million were a decrease of £152,803 million compared to September.
Experts attribute the drop to multiple factors, including subdued economic activity, weaker consumer spending and possible delays in remittances from state and federal agencies. “A sustained drop in VAT could significantly affect government operations, particularly the financing of infrastructure and social programs,” said a tax analyst.
The decline comes amid broader concerns about Nigeria’s revenue generation framework, which is heavily reliant on VAT and oil revenues. Analysts warn that continued deficits could strain the government’s budget and debt obligations if corrective measures are not implemented.
The FAAC report further showed that EMTL’s modest £39.646m in November was insufficient to offset the sharp drop in VAT revenues.
Policymakers are expected to meet soon to discuss strategies to stabilize revenue flows, including reforms to improve VAT collection efficiency and compliance across sectors.
Supporting these figures, the Office for National Statistics (NBS) reported that aggregate VAT stood at £2.06 trillion in the second quarter of 2025, a slight decrease of 0.03% on the first quarter of 2025. Local payments accounted for £1.09 trillion, foreign VAT contributed £459.95 billion and import VAT amounted to £508.55. billion pounds sterling.
With VAT contributing a significant portion of Nigeria’s non-oil revenue, stakeholders are closely monitoring how the government will respond to this worrying downward trend.