Nigeria’s Value Added Tax (VAT) collections have recorded a sharp decline for the third consecutive month, raising concerns about the sustainability of increased allocations to various tiers of government.

Official FAAC figures show that VAT revenue fell from ₦872.630 billion in September 2025 to ₦719.827 billion in October, before plunging further to ₦485.838 billion in November. The November 2025 FAAC communiqué revealed that distributable Federation Account revenue comprised ₦485.838 billion from VAT and ₦39.646 billion from the Electronic Money Transfer Levy (EMTL). October’s gross VAT revenue of ₦719.827 billion marked a decline of ₦152.803 billion from September.

Experts attribute the dip to multiple factors, including subdued economic activity, weaker consumer spending, and potential delays in remittances from states and federal agencies. “A sustained decline in VAT could significantly affect government operations, particularly funding for infrastructure and social programmes,” noted a fiscal analyst.

The decline comes amid broader concerns over Nigeria’s revenue generation framework, which heavily depends on VAT and oil revenues. Analysts warn that continued shortfalls may strain the government’s budget and debt obligations if corrective measures are not implemented.

FAAC’s report further showed that the modest ₦39.646 billion from EMTL in November was insufficient to offset the steep fall in VAT revenue.

Policymakers are expected to convene soon to discuss strategies to stabilise revenue inflows, including reforms to improve VAT collection efficiency and compliance across sectors.

Supporting these figures, the National Bureau of Statistics (NBS) reported that aggregate VAT stood at ₦2.06 trillion in Q2 2025, a slight 0.03% decline from Q1 2025. Local payments accounted for ₦1.09 trillion, foreign VAT contributed ₦459.95 billion, and import VAT totalled ₦508.55 billion.

With VAT contributing a significant portion of Nigeria’s non-oil revenue, stakeholders are closely monitoring how the government will respond to this worrying downward trend.

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