The challenging operating environment in Nigeria has driven down revenue from company income tax (CIT) by 31.05 percent over the past year. CIT is the tax levied on business profits from their operations.
CIT Revenue Decline in Q1 2026
According to the National Bureau of Statistics (NBS) first quarter (Q1) 2026 CIT report, revenue from CIT in Q1 2026 plummeted to N1.37 trillion, representing a 31.05 percent drop compared to the N1.98 trillion generated in Q1 2025. On a quarter-on-quarter basis, CIT revenue also fell by 8.08 percent from N1.49 trillion recorded in Q4 2025.
The report further indicates that domestic CIT contributed N538.91 billion, while foreign CIT payments accounted for N828.82 billion during the quarter. In terms of sectoral shares, financial and insurance activities led with 24.73 percent, followed by mining and quarrying at 16.06 percent, and manufacturing at 13.82 percent.
VAT Revenue Shows Growth
Conversely, Value Added Tax (VAT) revenue in Q1 2026 rose to N2.42 trillion, an increase of 17.06 percent from N2.06 trillion in Q1 2025. On a quarter-on-quarter basis, VAT collections grew by 9.98 percent from N2.20 trillion in Q4 2025. Of the total VAT collected, local payments stood at N1.11 trillion, foreign VAT payments were N830.47 billion, and import VAT contributed N477.55 billion.
Sectorally, manufacturing had the largest share of VAT at 29.75 percent, followed by information and communication at 20.61 percent, and mining and quarrying at 12.32 percent.
Historical Context and Analysis
Revenue from CIT has been volatile due to the harsh economic environment, which has forced businesses to either scale down operations, relocate from the country, or shut down completely. In Q4 2025, CIT revenue stood at N1.49 trillion, a 49.81 percent quarter-on-quarter decline from N2.96 trillion in Q3 2025. Although CIT recorded positive growth in Q3 2025 with a marginal 6.55 percent increase to N2.96 trillion from N2.78 trillion in Q2 2025, this growth was driven by foreign payments of N1.75 trillion, while domestic CIT was N1.21 trillion.
VAT collections have become a major component of federation revenue. Reports show that VAT allocations shared by federal, state, and local governments rose sharply in 2025, climbing to N7.73 trillion from N6.11 trillion in 2024, a 26.46 percent year-on-year increase. According to data from the Federation Account Allocation Committee (FAAC), VAT receipts expanded at the same pace across the three tiers of government. Of the total distributed in 2025, the Federal Government received about N1.16 trillion, states shared roughly N3.77 trillion, while local government areas (LGAs) took home about N710 billion.
Analysts, however, note that the jump in VAT revenue only reflects higher prices due to inflation and improved tax collection rather than a broad-based surge in economic activities.
