VAT collections rise to N2.42trn in Q1 as manufacturing, telecoms drive growth

NIGERIA generated N2.42 trillion in Value Added Tax (VAT) revenue during the first quarter (Q1) of 2026, representing a 17.06 percent increase compared to the N2.07 trillion recorded in the same period of 2025.

The figures were contained in the latest VAT report released by the National Bureau of Statistics (NBS), which also showed that collections grew by 9.98 percent from the N2.20 trillion posted in the fourth quarter (Q4) of 2025.

A breakdown of the revenue showed that local VAT payments contributed N1.11 trillion, while foreign VAT payments accounted for N830.47 billion. Import VAT generated N477.55 billion during the quarter.

READ ALSO: Nigeria’s VAT revenue climbs to N2.3trn in Q3 as collections surge

Sectoral performance

The NBS said VAT contributions varied significantly across sectors, with some industries recording strong growth while others declined.

On a quarter-on-quarter basis, activities of households as employers and undifferentiated goods-and-services-producing activities for own use recorded the highest growth rate at 74.36 percent. The arts, entertainment and recreation sector followed with a 20.91 percent increase, while manufacturing posted a 12.82 percent rise in VAT contributions.

However, not all sectors performed strongly. The education sector recorded the steepest decline, with VAT contributions dropping by 31.96 percent. Public administration and defence, including compulsory social security, fell by 31.38 percent, while activities of extraterritorial organisations and bodies declined by 29.89 percent.

Manufacturing remains dominant

Manufacturing remained the largest source of VAT revenue in Q1, accounting for 29.75 percent of total collections.

The information and communication sector ranked second with a 20.61 percent share, highlighting the growing role of telecommunications and digital services in the economy. Mining and quarrying followed with a contribution of 12.32 percent.

At the other end of the spectrum, activities of households as employers and undifferentiated goods-and-services-producing activities for own use contributed just 0.01 percent of total VAT revenue. Activities of extraterritorial organisations and bodies accounted for 0.02 percent, while water supply, sewerage, waste management and remediation activities contributed 0.06 percent.

According to the NBS, the figures underscore the continued importance of manufacturing, telecommunications and mining to Nigeria’s VAT revenue base, while also reflecting uneven growth patterns across sectors.

The bureau further noted that total VAT collections in Q1 2026 were 17.06 percent higher than the amount generated in the corresponding quarter of 2025.

Tax reforms and revenue diversification

VAT has become an increasingly important source of non-oil revenue for Nigeria as the government seeks to broaden its revenue base and reduce reliance on crude oil earnings.

READ ALSO: Lagos, Oyo, Rivers lead top VAT-contributing states in January

In June 2025, President Bola Tinubu assented to 4 major tax reform bills aimed at overhauling the country’s tax and revenue administration system. The legislation included the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill and the Joint Revenue Board (Establishment) Bill. The laws took effect in January 2026.

The strong VAT performance in the first quarter of 2026 reflects sustained activity in key sectors of the economy, particularly manufacturing, telecommunications and mining.

Implications

The increase in VAT revenue points to continued expansion of Nigeria’s non-oil revenue sources, providing additional fiscal resources for government operations and development spending.

The development comes months after the Nigerian government introduced new presumptive tax regulations for Micro, Small and Medium Enterprises (MSMEs) in March, a move aimed at simplifying tax compliance and encouraging greater participation in the formal economy.