Total Value Added Tax earnings rose to N1.08tn in January as a new sharing formula commenced, altering how the proceeds are split among the Federal Government, states, and Local Governments, findings by The PUNCH have shown.
Documents presented at the February meeting of the Federation Account Allocation Committee and obtained by The PUNCH on Tuesday showed that total VAT collections of TAX by the Nigeria Revenue Service stood at N1.08tn in January 2026, compared with N913.96bn in December 2025.
The increase of N169.20bn represents an 18.5 per cent rise month-on-month. However, the full N1.08tn was not available for sharing. VAT deductions at source amounted to N79.94bn in January, up from N67.45bn in December, leaving a net VAT of N1.00tn for distribution.
In December, the net VAT shared stood at N846.51bn. The month-on-month increase in the net distributable VAT was N156.72bn, also representing an 18.5 per cent increase.
January marked the first full month under the revised VAT sharing formula. Under the new structure, 10 per cent of net VAT goes to the Federal Government, 55 per cent to state governments, and 35 per cent to Local Governments.
Previously, the Federal Government received 15 per cent, states 50 per cent, and Local Governments 35 per cent. If the previous 15 per cent formula had been retained, the Federal Government would have received about N150.48bn from the N1.00tn net VAT shared in January, instead of the N100.32bn it got under the new 10 per cent structure, implying a shortfall of roughly N50.16bn.
Conversely, states, which now receive 55 per cent, shared about N551.77bn, meaning their allocation increased by approximately N50.16bn compared to the N501.61bn they would have received under the former 50 per cent formula.
Based on the new sharing formula, from the N1.00tn net VAT shared in January, the Federal Government received N100.32bn, states received N551.77bn, while Local Governments were allocated N351.13bn.
In December, under the old 15 per cent formula, the Federal Government’s VAT share stood at N126.98bn. The January allocation of N100.32bn, therefore, represents a decline of N26.65bn, or about 21 per cent, compared with what the Federal Government received in December.
For states, the impact of the new formula was positive. Their collective share rose to N551.77bn in January from N423.25bn in December, an increase of N128.52bn, equivalent to 30.4 per cent.
Local Governments received N351.13bn in January, up from N296.28bn in December, an increase of N54.85bn or 18.5 per cent.
The cost of collection rose alongside the higher VAT pool. The NRS VAT cost of collection, calculated at 4 per cent, increased to N43.33bn in January from N32.72bn in December, a rise of N10.61bn or 32.4 per cent.
The Nigeria Customs Service import VAT cost of collection, which stood at N3.84bn in December, was nil in January, which may be due to the tax reforms, which made NRS the main agency in charge of collecting government revenue.
Other statutory deductions included 3 per cent to the North East Development Commission Project Account, which rose to N31.20bn from N26.32bn, an increase of N4.87bn. The 0.5 per cent deduction to the Revenue Mobilisation Allocation and Fiscal Commission increased to N5.42bn from N4.57bn, up by N846.02m.
Combined, the NEDC and RMAFC deductions totalled N36.61bn in January compared with N30.89bn in December, reflecting a month-on-month increase of N5.72bn. The broader FAAC summary showed that total funds available for distribution in January across revenue lines stood at N3.04tn.
Total deductions amounted to N1.14tn, leaving a total net distributable revenue of N1.90tn. Of this amount, N896.78bn came from statutory revenue, while N1.00tn was net VAT. When VAT and statutory revenue were combined, the Federal Government’s total allocation stood at N525.23bn.
State governments received N767.29bn, local governments got N517.28bn, while the 13 per cent derivation share amounted to N90.19bn.
