The Federal Inland Revenue Service (FIRS) has published the Value Added Tax (VAT) revenue report for the first quarter of 2025, revealing that three states, Lagos, Rivers, and Oyo generated more than 80 percent of the total VAT collected in the country within the period.
According to the report, Nigeria generated a total of ₦1.47 trillion in VAT between January and March 2025. Lagos led all states with ₦819.62 billion, accounting for over 55% of total VAT. Rivers followed with ₦278.23 billion, while Oyo ranked third with ₦79.78 billion.
Other states with significant VAT contributions include Bayelsa (₦27.26 billion), Kano (₦22.97 billion), Edo (₦20.73 billion), and Delta (₦20.04 billion). In contrast, states such as Taraba (₦2.33 billion), Imo (₦2.34 billion), Cross River (₦2.65 billion), and Abia (₦2.92 billion) reported some of the lowest VAT figures.
In terms of contributions by region:
• South West generated ₦929.87 billion
• South South generated ₦364.99 billion
• North West generated ₦68.05 billion
• North Central generated ₦52.70 billion
• North East generated ₦30.04 billion
• South East generated ₦28.37 billion
However, the redistribution of VAT revenue among states and geopolitical zones has reignited attention, as it reveals that some regions received significantly more in allocations than they generated.
The report shows that:
• The North East, which contributed ₦30.04 billion, received ₦124.20 billion, representing an increase of over 313%.
• The South East, which contributed ₦28.37 billion, received ₦104.50 billion a 268.4% increase.
• The North West received ₦176.74 billion against a contribution of ₦68.05 billion a 159.7% increase.
• The North Central received ₦126.16 billion from a contribution of ₦52.70 billion a 139.4% gain.
• Meanwhile, the South South, which generated ₦364.99 billion, received ₦171.19 billion, 53% less than it contributed.
• The South West received ₦258.19 billion, about 72% less than its total contribution of ₦929.87 billion.
The report reflects the continuing use of a centrally coordinated VAT collection and redistribution model. VAT is currently collected by the Federal Government and shared among all levels of government according to a federally agreed formula.
The publication of the Q1 VAT figures comes at a time when the Federal Government is pushing for the passage of the National Tax Reform Bill. The bill, currently undergoing legislative review, aims to streamline Nigeria’s tax framework, improve compliance, expand the tax net, and strengthen state-level revenue generation capabilities.
The Tax Reform Committee, led by Taiwo Oyedele, has proposed reforms that include a unified taxpayer database, harmonization of federal and state taxes, and a shift toward performance-based revenue allocation to reduce over-dependence on federally collected taxes.
While the debate over VAT restructuring continues, the Q1 figures highlight the concentration of economic activity in a few states and ongoing fiscal disparities in the distribution of nationally collected revenues.
