Nigeria’s Value Added Tax (VAT) engine continues to power ahead, with the National Bureau of Statistics (NBS) reporting ₦2.06 trillion in VAT collections for Q2 2025.
Despite a marginal 0.03% quarter-on-quarter dip, the numbers signal a resilient consumption-driven tax system navigating inflationary pressures, shifting household spending patterns and post-subsidy economic rebalancing.
For a nation battling fiscal constraints, widening budget deficits, and the urgent need for non-oil revenue expansion, the new data highlights both structural strengths and emerging risk points in Nigeria’s tax architecture.
BRANDECONOMY ANALYSIS — VAT: Nigeria’s Most Reliable Revenue Workhorse
VAT remains the Federal Government’s most consistent, least volatile, and broad-based tax handle, especially in an era of fluctuating crude earnings and tightening global credit markets.
Q2 2025 VAT Breakdown
- Local VAT: ₦1.09 trillion
- Foreign VAT: ₦459.95 billion
- Import VAT: ₦508.55 billion
This distribution reinforces VAT’s dual advantage:
✓ Stable domestic consumption, and
✓ Robust import-driven collections, despite FX volatility.
Where the Growth Came From: Sectoral Insights
Strongest VAT Growth (QoQ):
- Real Estate Activities — +155.21%
A remarkable rebound, reflecting revived investments, estate development and rising urban demand. - Agriculture, Forestry & Fishing — +23.64%
Boosted by local production incentives and improved commodity flows. - Information & Communication — +17.75%
The sector’s ongoing digital expansion continues to deepen its tax footprint.
Steepest Declines (QoQ):
- Human Health & Social Work — –68.34%
- Electricity, Gas, Steam & Air Conditioning — –45.20%
- Water Supply, Sewerage & Waste Management — –29.36%
These declines mirror ongoing structural bottlenecks: power-sector instability, cost-of-service constraints, and pressure on healthcare institutions.
Who Paid the Most VAT?
Top contributing sectors in Q2 2025:
- Manufacturing — 27.19%
- Information & Communication — 20.76%
- Mining & Quarrying — 15.04%
This triad consistently shoulders more than half of national VAT revenue—affirming manufacturing’s dominance and ICT’s expanding tax prominence.
At the bottom of the pyramid:
- Households as employers — 0.005%
- Extraterritorial organisations — 0.02%
- Water supply & waste management — 0.03%
VAT Year-on-Year Growth: A Strong Fiscal Pulse
VAT collections in Q2 2025 increased 32.15% compared to Q2 2024—evidence of improved compliance, expanded digital tax systems and inflation-adjusted consumption patterns.
Meanwhile, Q1 2025 VAT also stood at ₦2.06 trillion, up 6.02% from Q4 2024 and 44.24% YoY.
This positions VAT as Nigeria’s most reliable non-oil revenue driver heading into 2026.
BRANDECONOMY Insight: VAT Will Define Nigeria’s Fiscal Future
As Nigeria transitions deeper into a post-oil, tax-led economic model, VAT performance matters more than ever.
Key structural signals from the data:
- Manufacturing & ICT are becoming Nigeria’s fiscal spine
- Real estate’s resurgence points to renewed investor confidence
- Weak utilities VAT signals infrastructure gaps that urgently need fixing
- Import VAT remains a strong lifeline amid forex pressures
Nigeria’s capacity to sustain annual VAT growth above 30% will significantly shape:
- Budget deficits
- State-level allocations
- Public service delivery
- Debt sustainability
- Capital market confidence
If current momentum holds—and compliance continues to tighten—VAT could surpass ₦9 trillion annually over the next three years.
