Nigeria collected N2.28 trillion in Value Added Tax in the third quarter of 2025, a 28.10% jump from the same period a year earlier, according to fresh data from the National Bureau of Statistics. The figure marks the highest quarterly VAT haul on record and continues a run of growth that has seen collections nearly double since Q3 2023, when the total stood at just under N950 billion.
- Total VAT revenue in Q3 2025 reached N2.28 trillion, up 10.66% from N2.06 trillion in Q2 2025 and up 28.10% year on year from Q3 2024’s N1.78 trillion the pace of annual growth has accelerated sharply, driven by a combination of Naira-denominated price inflation, improved compliance enforcement, and expanding formal economic activity
- Local VAT payments contributed the largest share at N1.12 trillion, with foreign VAT payments adding N680.23 billion and import VAT contributing N479.79 billion the foreign VAT component grew notably relative to prior quarters, reflecting rising multinational remittances as Nigeria tightens cross-border tax enforcement
- Manufacturing was the single largest sectoral contributor with a 25.89% share of total collections, followed by information and communication at 18.77% and mining and quarrying at 14.85% the same three sectors have dominated VAT contributions consistently across 2024 and 2025
- Administrative and support service activities recorded the highest quarter-on-quarter growth rate at 89.28%, followed by arts, entertainment and recreation at 82.49%, and human health and social work activities at 32.40%, suggesting a broadening of taxable activity into service sectors previously underrepresented in collections
- Real estate activities recorded the steepest quarterly contraction at negative 51.33%, followed by household employer activities at negative 36.22% and other service activities at negative 20.30% the real estate decline likely reflects the ongoing correction in property transaction volumes under tight credit conditions
- The N2.28 trillion figure compares with N948 billion collected in Q3 2023, meaning VAT revenue has more than doubled in two years as Nigeria’s expanded VAT enforcement, digital payment tracking, and the removal of petrol subsidies pushed up both prices and taxable transaction values across the economy
The trajectory of Nigeria’s VAT collections tells a more complicated story than raw growth alone. A significant portion of the year-on-year increase reflects the Naira’s depreciation and the resulting price inflation rather than real expansion in economic output or taxpayer base. When the Naira trades at multiples of its 2023 level, Naira-denominated tax revenues rise mechanically even if the underlying volume of goods and services sold stays flat. That caveat matters for how policymakers read the data. Still, the improvement in foreign VAT and the broadening of service sector contributions suggest that some of the growth is structural. Nigeria’s Federal Inland Revenue Service has invested heavily in digital invoicing systems and third-party data matching to catch VAT-liable businesses that previously fell outside the net. The consistent dominance of manufacturing, telecoms, and mining in the sectoral breakdown also reflects the concentration of Nigeria’s formal economy in those sectors, with the informal economy still largely outside VAT reach. The government’s medium-term goal of raising Nigeria’s tax-to-GDP ratio from roughly 10% to 18% by the end of the decade depends on closing that gap.
The Bigger Picture: Nigeria’s VAT performance in Q3 2025 is a genuine fiscal positive, but the context demands precision. A doubling of quarterly VAT revenue from N950 billion in Q3 2023 to N2.28 trillion in Q3 2025 sounds transformative. Over the same period the Naira depreciated from roughly N760 to the dollar to approximately N1,600, meaning that in dollar terms the VAT haul has barely moved. The real test of Nigeria’s tax reform story will come when inflation stabilises and the Naira finds a floor: if VAT collections continue to grow at this pace in a lower-inflation environment it will signal genuine formalisation and compliance gains. For now, the NBS data confirms that the revenue machinery is working harder, that enforcement is reaching sectors it previously missed, and that manufacturing and telecoms remain the backbone of Nigeria’s formal tax base. The challenge ahead is not collecting more from the same concentrated pool of large formal businesses but extending VAT discipline into the vast informal and services economy where most Nigerians actually work.
Source: Punch Nigeria | National Bureau of Statistics
