Nigeria’s Value Added Tax (VAT) collection surged to a historic N1.95 trillion in the fourth quarter (Q4) of 2024, marking the highest-ever quarterly VAT revenue recorded by the country. This represents a 9.23% increase from the N1.78 trillion collected in Q3 2024, according to the National Bureau of Statistics (NBS).
The data is contained in the latest NBS report titled “Sectorial Distribution of Value Added Tax Q4 2024”, released earlier this week. Analysts say the growth reflects rising tax compliance, a rebound in economic activities, and the inflation-driven increase in the nominal value of goods and services.
“On aggregate, Value Added Tax (VAT) for Q4 2024 was reported at N1.95 trillion. Domestic VAT payments accounted for N917.40 billion, non-import foreign VAT contributed N554.68 billion, while VAT on imports added N474.75 billion,” the NBS stated.
Sectors Driving Growth
Manufacturing remained the dominant contributor to VAT collections, accounting for 25.89% of the total. This was followed by the Information and Communication sector at 16.18%, and Mining and Quarrying with 15.52%.
Notably, agriculture, forestry, and fishing activities experienced a VAT growth rate of 70.83%, a promising sign of diversification in Nigeria’s tax base. The Human Health and Social Work sector also posted a 46.13% growth, signaling increased formal economic activity in public welfare-related services.
Interestingly, extraterritorial organizations and bodies such as embassies and international NGOs posted the highest growth rate at 180.05%, though from a relatively low base.
On the flip side, some sectors saw notable contractions. VAT from household activities as employers dropped by 28.97%, while the Information and Communication sector saw a surprising 23% decline in VAT growth despite being one of the top contributors in absolute terms.
Strong Year-on-Year Performance
Compared to the same period in 2023, VAT revenue grew by a staggering 62.19%. This performance, according to economic analysts, is a reflection of both improved enforcement and macroeconomic adjustments including higher prices, broader tax coverage, and better reporting standards.
Economist and tax consultant Dr. Tope Falade told Suntrobyte Digital News that the increase is “a sign that Nigeria’s revenue administration is improving, though inflation and currency depreciation may have contributed to the inflated nominal numbers.”
Policy Backdrop: Tinubu’s Tax Reform Bills
The significant leap in VAT collection comes in the wake of major tax reforms signed into law by President Bola Tinubu in June 2025. The reforms, encompassing four critical bills The Nigeria Tax Bill, The Tax Administration Bill, The Nigeria Revenue Service (Establishment) Bill, and The Joint Revenue Board (Establishment) Bill aim to streamline tax collection and strengthen the Federal Inland Revenue Service (FIRS).
According to the Presidency, the reforms followed “months of rigorous stakeholder engagement and public consultations” across various sectors and regions. Although met with skepticism at first, the bills are now beginning to yield tangible results, especially in indirect taxes like VAT.
Tax expert and executive director at the Centre for Fiscal Transparency, Amina Sani, said the Q4 VAT report underscores the “urgent need to modernize Nigeria’s tax infrastructure and harmonize data between federal and subnational governments.”
Looking Ahead
While the VAT surge is a positive sign, experts warn that over-reliance on indirect taxes like VAT especially in an inflationary economy can widen inequality if not matched with targeted social spending.
The federal government has previously stated its commitment to improving tax-to-GDP ratio from the current 10.8% to 18% by 2026, in line with ECOWAS regional targets. However, success will depend on maintaining public trust, simplifying tax compliance, and ensuring efficient utilization of funds.
