New Tax Laws Boost States’ VAT Revenue Share To N551bn in January

Nigeria’s 36 state governments received N551.77 billion from the N1.08 trillion Value Added Tax (VAT) collected in January 2026. This is a 30.4 per cent increase from N423.25 billion in December 2025. The distribution reflects the new federal tax laws.Under the new laws, the federal government’s share of net VAT is 10 per cent, down from 15 per cent. States’ share is now 55 per cent, up from 50 per cent. Local governments’ share remains at 35 per cent.

Nigeria Revenue Service (NRS) data, presented to the Federation Account Allocation Committee (FAAC), shows total VAT collections at N1.08 trillion in January 2026, compared to N913.96 billion in December 2025.

After N79.9 billion in source deductions, net VAT was N1 trillion.The federal government received N100.32 billion (10 per of net VAT), states N551.77 billion (55 per cent), and local governments N351.13 billion.In December, under the previous 15% formula, the federal share was N126.98 billion. January’s allocation of N100.32 billion is a decrease of N26.66 billion, or 21 per cent .States’ share increased from N423.25 billion to N551.77 billion, a rise of N128.52 billion or 30.4 per cent . Local governments’ share rose from N296.28 billion to N351.13 billion, an 18.5% increase.Collection costs were N43.33 billion in January, up 32.4 per cent from N32.72 billion in December.Lagos Leads Top VAT Contributors.

Other deductions included 3% to the North East Development Commission, at N31.20 billion (up from N26.32 billion), and 0.5% to the Revenue Mobilisation Allocation and Fiscal Commission, at N5.42 billion (up from N4.57 billion).

These totaled N36.61 billion, compared to N30.89 billion in December.FAAC reported total funds available for distribution at N3.04 trillion in January. Deductions totaled N1.14 trillion, leaving net distributable revenue of N1.90 trillion.

This included N896.78 billion from statutory revenue and N1 trillion from net VAT. Combined allocations: federal government N525.23 billion; states N767.29 billion; local governments N517.28 billion; 13 per cent derivation N90.19 billion.

State VAT allocations showed Lagos with the highest gross share of N111.22 billion.
After a N9.89 billion deduction, the state net was N101.34 billion, and its local governments received N70.57 billion.Oyo ranked second at N24.04 billion gross, followed by Rivers (N23.57 billion), Kano (N17.37 billion), FCT-Abuja (N15.76 billion), and Bayelsa (N15.07 billion). Others: Katsina N13.82 billion, Jigawa N12.92 billion, Delta N12.89 billion, Kaduna N12.73 billion.Lower allocations went to Ebonyi (N9.45 billion), Ekiti (N9.83 billion), Taraba (N9.37 billion), and Nasarawa (N9.77 billion).