Domestic VAT drives Nigeria’s Q1 tax collections to N2.42trn

By Chinwendu Obienyi

Nigeria’s value added tax (VAT) collections rose to N2.42 trillion in the first quarter of 2026, with strong growth in local VAT payments emerging as the key driver of the increase, according to the latest data from the National Bureau of Statistics (NBS).

The figure represents a 17.06 percent increase compared with the N2.07 trillion recorded in the corresponding period of 2025, underscoring improved domestic economic activity and enhanced tax administration following the implementation of new fiscal reforms.

Data from the NBS show that local VAT accounted for the largest share of total collections, contributing N1.11 trillion during the quarter. This outpaced foreign VAT, which stood at N830.47 billion, and import VAT, which contributed N477.55 billion.

Analysts say the strong performance of local VAT reflects increased compliance, a broader tax net, and sustained consumer demand across key sectors of the economy.

The introduction of new tax laws, which came into effect in January 2026, is also believed to have strengthened enforcement and reduced leakages in the system.

On a quarter-on-quarter basis, VAT collections rose by 9.98 percent from N2.20 trillion in the fourth quarter of 2025, indicating continued momentum in revenue generation.

Sectoral data reveal that manufacturing retained its position as the largest contributor to VAT revenue, accounting for 29.75 percent of total collections.

The information and communication sector followed with 20.61 percent, highlighting the growing role of digital services in Nigeria’s tax base, while mining and quarrying contributed 12.32 percent.

Some sectors recorded notable increases in VAT contributions during the period.

Activities of households as employers and undifferentiated goods and services-producing activities for own use posted the highest quarter-on-quarter growth of 74.36 percent, albeit from a low base. The arts, entertainment and recreation sector grew by 20.91 percent, while manufacturing recorded a 12.82 percent increase.

However, the data also point to uneven performance across sectors. VAT contributions from the education sector declined by 31.96 percent, while public administration and defence fell by 31.38 percent. Activities of extraterritorial organisations and bodies also dropped by 29.89 percent.

Despite these declines, the overall growth in VAT collections highlights the increasing importance of consumption taxes in Nigeria’s revenue framework. With oil revenues remaining volatile, VAT continues to serve as a critical source of non-oil income for the government.

In June 2025, President Bola Tinubu signed into law a set of tax reform bills aimed at modernising Nigeria’s fiscal system and improving revenue mobilisation. The reforms, which took effect at the start of 2026, are already beginning to reflect stronger tax performance, particularly in domestic VAT collections.

The NBS data suggest that Nigeria’s efforts to strengthen its non-oil revenue base are gaining traction, with local economic activity playing a central role in driving growth in tax receipts.