Abuja, Nigeria – Nigeria’s 36 state governments received a combined N551.77 billion as their share of Value Added Tax (VAT) revenue in January 2026, marking a substantial increase attributed to the Federal Government’s new tax sharing framework. This figure represents a 30.4 percent rise compared to the N423.25 billion shared by states in December 2025, according to data released by the Federation Account Allocation Committee (FAAC).
The notable increase follows the implementation of newly introduced tax laws, which have recalibrated the VAT sharing formula among the three tiers of government. Under this revised arrangement, the Federal Government’s share of net VAT has decreased from 15 percent to 10 percent, while the states’ share has climbed to 55 percent, up from the previous 50 percent. The 35 percent allocation for local governments remains unchanged.
Figures from the Nigeria Revenue Service revealed that total VAT collections reached N1.08 trillion in January, an increase from N913.96 billion in December 2025. After deductions at source totaling N79.9 billion, the net VAT available for distribution stood at approximately N1 trillion. From this net amount, the Federal Government received N100.32 billion, aligning with its new 10 percent share, while states collectively obtained N551.77 billion. Local governments were allocated N351.13 billion.
The Federal Government experienced a decline in its allocation, receiving N26.65 billion less than the N126.98 billion it received in December under the old formula, translating to about a 21 percent drop. Conversely, states recorded a significant gain, with their combined share rising by N128.52 billion from December to January. Local governments also saw an 18.5 percent increase, receiving N351.13 billion in January compared to N296.28 billion in December.
However, the cost of revenue collection also escalated during this period, with the revenue service reporting N43.33 billion in January, a 32.4 percent increase from N32.72 billion in December. Other statutory deductions included N31.20 billion for the North East Development Commission (NEDC) project account, up from N26.32 billion, and N5.42 billion for the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), an increase from N4.57 billion. Combined, these two agencies received N36.61 billion in January, marking a N5.72 billion month-on-month increase.
FAAC’s broader revenue summary indicated that total funds available for distribution in January across all revenue lines amounted to N3.04 trillion. After total deductions of N1.14 trillion, the net distributable revenue was N1.90 trillion. Of this, N896.78 billion originated from statutory revenue, and N1 trillion from net VAT. When both revenue sources were combined, the Federal Government received N525.23 billion, state governments received N767.29 billion, and local governments were allocated N517.28 billion, with the 13 percent derivation share standing at N90.19 billion.
A detailed breakdown of VAT allocations among states showed Lagos State as the top beneficiary, receiving N111.22 billion in gross VAT allocation. After N9.89 billion in deductions, Lagos retained N101.34 billion, with its local governments collectively receiving N70.57 billion. Other leading recipients included Oyo State with N24.04 billion, Rivers State with N23.57 billion, Kano State with N17.37 billion, and the Federal Capital Territory with N15.76 billion. Bayelsa State received N15.07 billion, Katsina State N13.82 billion, Jigawa State N12.92 billion, Delta State N12.89 billion, and Kaduna State N12.73 billion. States with relatively lower allocations included Ekiti State with N9.83 billion, Nasarawa State with N9.77 billion, Ebonyi State with N9.45 billion, and Taraba State with N9.37 billion.
