By David Akinmola
Nigeria’s Value Added Tax (VAT) collections rose to N2.42 trillion in the first quarter of 2026, representing a 17 per cent increase from the N2.07 trillion recorded in the corresponding period of 2025, reflecting improved economic activity, stronger tax administration and increased compliance across key sectors of the economy.
Latest data released by the National Bureau of Statistics showed that VAT revenue maintained its upward trajectory despite persistent inflationary pressures and challenges facing businesses in the operating environment.
The report indicated that domestic VAT accounted for the bulk of collections during the period, while contributions from foreign VAT and import VAT also supported overall revenue performance.
Analysts attributed the increase to a combination of factors, including rising consumer spending, higher prices of goods and services, digital economy expansion and ongoing reforms by the Federal Inland Revenue Service aimed at broadening the tax net and improving revenue collection efficiency.
The growth in VAT receipts comes at a time when the Federal Government is intensifying efforts to boost non-oil revenue and reduce reliance on crude oil earnings amid ongoing fiscal pressures.
Economic analysts noted that the sustained increase in VAT collections underscores the growing importance of consumption taxes as a key source of government revenue, particularly as authorities seek to strengthen fiscal sustainability and fund critical infrastructure and social development programmes.
According to stakeholders, improvements in tax administration, enhanced monitoring of taxable transactions and increased adoption of digital payment channels have contributed to stronger VAT performance in recent quarters.
The development is expected to provide additional fiscal support to the federal, state and local governments, which share VAT proceeds through the Federation Account Allocation Committee (FAAC).
Industry players, however, cautioned that while rising VAT collections are positive for government revenues, authorities must balance revenue mobilisation efforts with measures that support business growth and household purchasing power amid prevailing economic challenges.
The latest figures reinforce the government’s strategy of expanding non-oil revenue streams as part of broader economic reforms aimed at strengthening public finances and reducing budget deficits.
With VAT collections maintaining steady growth, analysts believe consumption taxes will continue to play a central role in Nigeria’s revenue framework, particularly as policymakers explore options for enhancing tax efficiency and broadening the country’s tax base.
