By Boluwatife Oshadiya | March 4, 2026
KEY POINTS
- Nigeria’s VAT revenue rose to ₦2.28 trillion in Q3 2025, up 10.66% quarter-on-quarter
- Year-on-year collections climbed 28.10% compared to Q3 2024
- Manufacturing, information and communication, and mining accounted for nearly 60% of total VAT
MAIN STORY
Nigeria’s Value Added Tax (VAT) revenue increased to ₦2.28 trillion in the third quarter of 2025, reflecting a 10.66% rise from ₦2.06 trillion recorded in the preceding quarter, according to the latest data released by the National Bureau of Statistics.
The figures were published in the agency’s Sectoral Distribution of VAT Q3 2025 report, which also showed that VAT collections expanded 28.10% on a year-on-year basis compared to Q3 2024, underscoring sustained consumption and corporate activity across key sectors of the economy.
A breakdown of the revenue profile shows that local VAT payments dominated collections at ₦1.12 trillion. Foreign VAT payments contributed ₦680.23 billion, while import VAT added ₦479.79 billion during the quarter.
“Value Added Tax (VAT) in Q3 2025 was ₦2.28 trillion, showing an increase of 10.66% on a quarter-on-quarter basis from ₦2.06 trillion in Q2 2025. Local payments stood at ₦1.12 trillion, foreign VAT payments were ₦680.23 billion, while import VAT contributed ₦479.79 billion in Q3 2025,” the National Bureau of Statistics stated in the report.
On a quarter-on-quarter basis, administrative and support service activities recorded the highest growth rate at 89.28%. Arts, entertainment and recreation followed with 82.49%, while human health and social work activities grew by 32.40%.
Conversely, real estate activities posted the sharpest contraction at –51.33%. Activities of households as employers, including undifferentiated goods- and services-producing activities for own use, declined by 36.22%, while other service activities fell by 20.30%.
In terms of sectoral contributions, manufacturing led the table with 25.89% of total VAT generated in Q3 2025. Information and communication followed with 18.77%, while mining and quarrying accounted for 14.85%. Combined, the three sectors contributed nearly 60% of total VAT receipts during the quarter.
At the lower end of the spectrum, activities of households as employers recorded the smallest share at 0.003%, followed by activities of extraterritorial organisations and bodies, and water supply, sewerage and waste management, each contributing 0.03%.
THE ISSUES
Revenue Stability Amid Fiscal Pressure
VAT remains one of Nigeria’s most critical non-oil revenue streams, particularly as oil earnings continue to fluctuate due to global price volatility and production challenges. The 28.10% year-on-year increase signals improved tax compliance and broader economic formalisation, both of which are central to fiscal sustainability.
However, the concentration of VAT receipts in a handful of sectors raises structural concerns. With manufacturing, telecoms, and mining driving the bulk of collections, revenue resilience remains tied to sector-specific performance. Any downturn in these industries could materially affect quarterly receipts.
Sectoral Divergence
The sharp contraction in real estate VAT growth reflects broader stress within the property market, which has faced high financing costs, subdued consumer purchasing power, and rising construction expenses. Meanwhile, the surge in administrative services and arts and entertainment suggests recovery in service-oriented segments that were previously constrained.
This divergence highlights uneven economic momentum. While parts of the economy are expanding, others remain under pressure — a pattern that complicates policy calibration for revenue authorities and fiscal planners.
Foreign and Import VAT Dynamics
Foreign VAT payments of ₦680.23 billion point to growing cross-border digital services and imported services consumption. Import VAT of ₦479.79 billion, meanwhile, underscores continued reliance on foreign goods, a factor that intersects with exchange rate management and trade balance objectives.
WHAT’S BEING SAID“
The sustained increase in VAT collections reflects improved compliance and stronger sectoral performance, particularly in manufacturing and information services,” said Dr. Adeyemi Oladipo, Director of Fiscal Policy Studies at the University of Lagos.
“However, the steep contraction in real estate VAT suggests capital-intensive sectors are feeling the impact of high borrowing costs and weakened disposable income,” said Chioma Eze, Investment Analyst at Lagos-based advisory firm MarketBridge Capital.
A senior official at the National Bureau of Statistics added, “The data indicates strong year-on-year expansion, but sectoral disparities remain evident. Policymakers will need to assess which industries require targeted intervention to sustain momentum.”
WHAT’S NEXT
- The Q4 2025 VAT report is expected in the coming months, offering a full-year revenue picture
- Fiscal authorities are likely to examine sectoral imbalances ahead of mid-year budget performance reviews
- Analysts will watch whether real estate and household activities rebound as financing conditions evolve
Sustained growth in VAT receipts will remain central to Nigeria’s non-oil revenue strategy, especially as government spending pressures intensify.
The Bottom Line
Nigeria’s ₦2.28 trillion VAT haul in Q3 2025 signals solid revenue momentum and deeper economic formalisation. But the data also reveals a structural reality — the country’s tax engine is increasingly dependent on a narrow cluster of sectors. Long-term fiscal stability will depend not just on higher collections, but on broader-based economic expansion.
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