Nigerian States, Geopolitical Zones With Highest VAT Contributions in 2025, Lagos, South-West Lead
- Lagos contributed 52% of Nigeria's local VAT in 2025, reaffirming its economic dominance
- South-West generated the highest VAT, while North-East and South-East lagged significantly behind
- New tax reforms threaten Lagos's VAT revenues by reallocating collections based on consumption locations
Lagos State once again proved its economic dominance in 2025, accounting for more than half of Nigeria’s non-import Value Added Tax (VAT) collections.
Documents from the Federal Account Allocation Committee (FAAC) show that the Nigeria Revenue Service (NRS) collected N3.4 trillion from Lagos alone out of the N6.5 trillion generated as local VAT during the year.
Source: UGC
This means Lagos contributed a staggering 52 per cent of all locally generated VAT in Nigeria, far ahead of any other state.
The figures reinforce the state’s role as the country’s commercial nerve centre, hosting the headquarters of most major banks, telecoms firms, manufacturers, and multinationals.
South-West leads all geopolitical zones
A zonal breakdown further highlights the imbalance in VAT contributions across the country.
The South-West emerged as the top-performing geopolitical zone, generating N3.97 trillion in VAT during the year.
The South-South followed with N1.29 trillion, buoyed largely by Rivers, Bayelsa, and Delta States.
The North Central zone, including the Federal Capital Territory (FCT), came next with N600.3 billion.
At the lower end of the scale, the North-West generated N370.9 billion, the North-East contributed N201.3 billion, while the South-East recorded the least with N139.7 billion.
Nigeria generated N8.6trn VAT in 2025
Total VAT collections for 2025 stood at N8.6 trillion, according to Daily Trust. Of this amount, the NRS collected N6.5 trillion as non-import VAT, while the Nigeria Customs Service generated N2.03 trillion from import VAT.
Monthly figures showed fluctuations throughout the year. Collections peaked in December at N913.9 billion, while November recorded the lowest figure of N563 billion.
September also stood out with a strong N872.6 billion haul, reflecting increased economic activity toward year-end.
Top VAT-contributing states after Lagos
After Lagos, Rivers State ranked second with N831.5 billion. Oyo followed with N370.2 billion, while the FCT contributed N334.3 billion.
Bayelsa State recorded N164.2 billion, reflecting the impact of oil-related activities.
Other notable contributors included Kano (N120.3 billion), Delta (N120 billion), Edo (N88.1 billion), Akwa Ibom (N78.9 billion), and Ogun (N40.5 billion). At the bottom of the table were Cross River (N14.4 billion) and Abia (N16.7 billion).
Why Lagos may lose under new tax reforms
Despite its overwhelming contribution, Lagos may be the biggest loser under Nigeria’s new tax regime.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has warned that ongoing VAT reforms will significantly reduce the state’s share.
President Bola Tinubu signed four major tax reform bills into law, effective January 2026, aimed at simplifying tax administration and correcting revenue inequities.
Source: Twitter
Under the new framework, VAT remittances will no longer be tied primarily to company headquarters, many of which are based in Lagos.
Oyedele explained that firms like MTN, Dangote, BUA, and major banks currently remit VAT from Lagos due to centralised finance departments.
The reforms seek to redistribute VAT more fairly across states where consumption actually occurs, even if that means Lagos takes a hit.
Tax returns: FG issues urgent warning to Nigerians
Legit.ng earlier reported that as critical tax deadlines draw near, the Federal Government has issued a stern warning to Nigerians, stressing that paying taxes alone does not fulfil legal obligations.
Employers and individuals must also file annual tax returns or face possible penalties.
The warning came from Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, who expressed concern over Nigeria’s persistently low tax compliance rate.
Source: Legit.ng
