Lagos State Dominates Nigeria's VAT Collections in 2025
Lagos State has reaffirmed its position as Nigeria's economic powerhouse by contributing more than half of the country's non-import Value Added Tax (VAT) collections in 2025. According to official documents from the Federal Account Allocation Committee (FAAC), the Nigeria Revenue Service (NRS) collected a remarkable N3.4 trillion from Lagos alone out of the total N6.5 trillion generated as local VAT throughout the year.
This staggering figure represents 52 percent of all locally generated VAT in Nigeria, placing Lagos far ahead of any other state in terms of revenue contribution. The data underscores the state's crucial role as the nation's commercial nerve center, hosting headquarters of most major banking institutions, telecommunications companies, manufacturing firms, and multinational corporations that drive economic activity.
Geopolitical Zones Show Significant VAT Disparities
A comprehensive zonal breakdown reveals substantial imbalances in VAT contributions across Nigeria's six geopolitical regions. The South-West emerged as the top-performing zone, generating an impressive N3.97 trillion in VAT during 2025, largely propelled by Lagos State's massive contribution.
The South-South region followed with N1.29 trillion, primarily supported by Rivers, Bayelsa, and Delta States. The North Central zone, which includes the Federal Capital Territory (FCT), recorded N600.3 billion in VAT collections.
At the lower end of the spectrum, the North-West generated N370.9 billion, while the North-East contributed N201.3 billion. The South-East recorded the lowest VAT collection among all zones with just N139.7 billion, highlighting significant regional economic disparities.
Total VAT Collections and Monthly Performance
Nigeria's total VAT collections for 2025 reached N8.6 trillion according to official reports. This amount comprised N6.5 trillion in non-import VAT collected by the NRS and N2.03 trillion in import VAT generated by the Nigeria Customs Service.
Monthly collection figures demonstrated notable fluctuations throughout the year. December recorded the highest collection at N913.9 billion, while November showed the lowest figure of N563 billion. September also registered strong performance with N872.6 billion, reflecting increased economic activity as the year approached its conclusion.
Top Performing States After Lagos
Following Lagos State's dominant performance, Rivers State ranked second with N831.5 billion in VAT contributions. Oyo State followed with N370.2 billion, while the Federal Capital Territory contributed N334.3 billion. Bayelsa State recorded N164.2 billion, demonstrating the continued impact of oil-related economic activities.
Other significant contributors included:
- Kano State: N120.3 billion
- Delta State: N120 billion
- Edo State: N88.1 billion
- Akwa Ibom State: N78.9 billion
- Ogun State: N40.5 billion
At the bottom of the ranking were Cross River State with N14.4 billion and Abia State with N16.7 billion in VAT contributions.
New Tax Reforms Threaten Lagos's VAT Dominance
Despite its overwhelming contribution to national VAT collections, Lagos State faces potential revenue reductions under Nigeria's newly implemented tax regime. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has warned that ongoing VAT reforms could significantly diminish the state's share of tax revenues.
President Bola Tinubu signed four major tax reform bills into law in January 2026, aiming to simplify tax administration and address revenue distribution inequities. The new framework fundamentally changes how VAT is allocated, shifting from a system tied primarily to company headquarters locations to one based on actual consumption patterns across states.
Oyedele explained that major corporations including MTN, Dangote Group, BUA, and leading banks currently remit VAT from Lagos due to centralized finance departments. The reforms seek to redistribute VAT more equitably across states where consumption actually occurs, which could substantially reduce Lagos's share despite its current economic dominance.
Government Emphasizes Tax Compliance Requirements
As critical tax deadlines approach, the Federal Government has issued a strong warning to Nigerian taxpayers. Officials stress that merely paying taxes does not fulfill legal obligations, emphasizing that both employers and individuals must also file annual tax returns to avoid potential penalties.
Taiwo Oyedele expressed particular concern about Nigeria's persistently low tax compliance rate, highlighting the need for improved taxpayer education and enforcement mechanisms. The government's renewed focus on tax administration comes as part of broader efforts to enhance revenue collection and ensure fair distribution across all states and geopolitical zones.
