KEY POINTS
- Manufacturing companies in Nigeria paid ₦875.42 billion in Value Added Tax (VAT) between January and September 2025.
- This represents a 54.7% increase compared to the same period in 2024, when the sector paid ₦309.41 billion less.
- The sector remains the top contributor to Nigeria’s VAT revenue, accounting for over 25% of total collections in the third quarter of 2025.
- Experts warn that the jump in tax payments is partly due to rising prices and inflation, rather than a real growth in factory production.
MAIN STORY
The manufacturing sector has continued to lead Nigeria’s non-oil tax revenue, with VAT payments from the sector jumping by 54.7% in the first nine months of 2025. According to the latest report from the National Bureau of Statistics (NBS), manufacturers paid a total of ₦875.42 billion during this period.
This figure is already 51.3% higher than the ₦578.39 billion the entire sector paid in the full year of 2023, showing how quickly tax collections from factories are growing.
A breakdown of the numbers shows that manufacturing was the biggest contributor to VAT in 2025, holding a 25.89% share in the third quarter. It also led in the first and second quarters with over 26% and 27% respectively. Other top sectors included Information and Communication at 18.77% and Mining at 14.85%. Economists say these figures show that the government is leaning more on the industrial sector to fund public spending as it moves away from relying solely on oil.
However, industry experts and the Manufacturers Association of Nigeria (MAN) have raised concerns. While the tax numbers are high, analysts say this is partly because of higher product prices, rising costs, and the fall of the naira, which have all pushed up the taxable value of goods. The Director General of MAN, Segun Ajayi-Kadir, warned that high taxes are putting too much pressure on companies. He noted that the high VAT burden is passed on to consumers, which hurts their ability to buy goods and makes Nigerian products less competitive against foreign ones.
WHAT’S BEING SAID
- “The high VAT rate… makes Nigerian products less competitive both locally and internationally,” said Segun Ajayi-Kadir, Director General of MAN.
- Analysts cautioned that the rise in VAT does not necessarily mean factories are producing more, but that “inflation-driven price adjustments” have inflated the tax figures.
- Economists noted that the surge underscores the sector’s “expanding fiscal significance” as the government looks for more non-oil money.
WHAT’S NEXT
- Demand Watch: Manufacturers are worried that higher prices from VAT will lead to more “unsold inventory” as consumers struggle to buy goods.
- Policy Debates: There is ongoing pressure from MAN for the government to avoid further VAT increases to prevent a “demand crunch.”
- Year-End Report: Investors and policymakers are waiting for the Q4 2024 results to see if the manufacturing sector will cross the ₦1 trillion mark in total VAT for the year.
BOTTOM LINE
The Bottom Line is that while the government’s pockets are getting fuller from manufacturing taxes, the factories themselves are feeling the pinch. If the high cost of doing business and high taxes aren’t balanced, the very sector funding the government might struggle to keep people employed and keep prices low for the average Nigerian.
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