VAT collections jump 17% as Nigeria records ₦2.42 trillion in three months

Nigeria recorded a strong increase in Value Added Tax (VAT) collections in the first quarter of 2026, reflecting improved economic activity and stronger tax compliance across key sectors of the economy.

According to data released by the National Bureau of Statistics (NBS), VAT revenue rose to ₦2.42 trillion in Q1 2026, representing a 17.06% increase compared to ₦2.07 trillion recorded in the same period of 2025.

The figure also shows a 9.98% rise when compared with ₦2.20 trillion generated in the fourth quarter of 2025, indicating steady quarter-on-quarter growth.

The report highlights that Nigeria’s tax system is gradually becoming more efficient, especially following recent reforms aimed at strengthening revenue collection and reducing leakages.

Breakdown of VAT collections

Of the total VAT generated during the quarter:

Local transactions contributed ₦1.11 trillion, showing strong domestic consumption and business activity.

Foreign VAT payments accounted for ₦830.47 billion, reflecting continued import-related economic engagement.

Import VAT stood at ₦477.55 billion, showing sustained importation of goods and services into the country.

Sector performance

The NBS report also revealed that VAT contributions varied widely across different sectors of the economy.

The manufacturing sector remained the largest contributor, accounting for 29.75% of total VAT collections. This confirms its position as a key driver of Nigeria’s non-oil revenue base.

The information and communication sector, which includes telecommunications and digital services, followed with 20.61%, highlighting the growing importance of technology-driven services in the economy.

The mining and quarrying sector came third with 12.32%, supported by ongoing activities in solid minerals and extractive industries.

On the lower end, sectors such as water supply, waste management, and environmental services contributed just 0.06%, while activities of households as employers accounted for only 0.01%, showing minimal tax contribution from informal and low-scale economic activities.

Fastest growing sectors

Some sectors recorded impressive growth in VAT contributions during the period under review.

The household services sector recorded the highest increase, growing by 74.36% quarter-on-quarter, suggesting rising informal-to-formal economic transitions in some areas.

The arts, entertainment, and recreation sector also grew strongly by 20.91%, supported by increased consumer spending on leisure and creative activities.

The manufacturing sector posted a solid 12.82% increase, reinforcing its role as a backbone of government revenue generation.

Declining sectors

Despite overall growth, some sectors recorded declines in VAT contributions.

The education sector saw the sharpest drop, falling by 31.96%, possibly reflecting funding structures, exemptions, or reduced taxable activities.

The public administration and defence sector declined by 31.38%, while activities of extraterritorial organisations and bodies fell by 29.89% during the period.

Economic implication

Experts say the steady rise in VAT collections suggests that Nigeria’s non-oil revenue base is gradually strengthening, which is important for fiscal stability amid fluctuating oil earnings.

The growth also reflects increased economic activity in manufacturing, telecommunications, and trade-related sectors, which continue to dominate formal tax contributions.

The introduction of new tax reforms that came into effect in January 2026 is also expected to further improve compliance, broaden the tax base, and enhance revenue collection efficiency in the coming quarters.

Overall, the Q1 2026 VAT performance signals a positive trend for Nigeria’s economy, showing gradual diversification away from oil dependency and stronger reliance on internally generated revenue.