VALUE ADDED TAX (VAT) remained one of Nigeria’s most important sources of government revenue in January 2026, as collections rose significantly compared with the previous month. The figures also once again exposed the wide disparity between what some states generate and the portion they eventually receive from the centrally pooled distribution system.
Data from the Federation Account Allocation Committee (FAAC) shows how the top five VAT-generating states performed in January 2026 and the amounts they received from the N913.47 billion non-import VAT pool shared among the three tiers of government.
Lagos State maintained its dominant position in VAT generation. The state produced N533.40 billion in January, representing 58.39 percent of total non-import VAT collected during the month.
Despite this overwhelming contribution, Lagos received a gross allocation of N111.22 billion from the pool. After statutory deductions were applied, the state retained N101.34 billion, illustrating the significant gap between what it generated and the amount returned through the revenue-sharing framework.
Oyo State emerged as the second-highest state in terms of gross VAT allocation. It generated N67.18 billion in VAT and received N24.04 billion from the distribution pool. Although its contribution was far smaller than Lagos’, the state still ranked among the leading performers in VAT receipts.
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Rivers State came in third, contributing N66.35 billion to VAT collections and receiving a gross allocation of N23.57 billion. Economic activities linked to the oil-producing region helped sustain its strong VAT performance, though the amount returned to the state was considerably lower than what Lagos generated.
The Federal Capital Territory also featured among the top contributors. It generated N39.73 billion in VAT during the month and obtained N15.76 billion from the centrally distributed pool. Administrative operations and a vibrant commercial environment in Abuja helped support its VAT inflows.
Bayelsa State rounded out the top five list, generating N34.62 billion in VAT in January. From the allocation pool, the state received a gross amount of N15.07 billion, reflecting the redistribution mechanism used to spread revenues across the federation.
Overall, the January 2026 data underscores the heavy concentration of VAT generation in a handful of economically active locations, particularly Lagos. At the same time, it highlights how Nigeria’s revenue-sharing structure pools VAT receipts at the federal level before redistributing them based on an agreed formula, resulting in noticeable differences between the amounts states generate and what they ultimately receive.
