Nigerian VAT Revenue Climbs 84.6% in 2024, Reaches N6.72 Trillion

Nigeria has reported a 84.6% year-on-year (YoY) increase in Value Added Tax (VAT) from N3.64 trillion recorded in 2023 to N6.72 trillion in 2024.

The surge showed the effectiveness of the country’s tax reforms and its growing economic resilience amidst global challenges.

The National Bureau of Statistics (NBS) in its latest VAT report revealed that the first quarter of 2024 recorded a solid N1.43 trillion in VAT collections, followed by a 9.09% increase in Q2 to bring the total for the period to N1.56 trillion.

The growth continued into the latter half of the year with VAT revenue reaching N1.78 trillion in Q3, representing a 14% increase from Q2. By the end of the year, Q4 saw VAT revenues climb to N1.95 trillion, up 9.5% from the previous quarter.

Domestic VAT payments led the charge, contributing N917.40 billion in Q4 while non-import foreign VAT payments stood at N554.68 billion, and import VAT generated N474.75 billion during the same period.

This diversified revenue stream has provided the federal government with greater flexibility in managing its fiscal policies.

The report also highlighted sector-specific performances with notable growth in industries such as agriculture, forestry and fishing that grew by 70.83% in VAT revenue.

The health and social work sectors experienced a 46.13% growth due to rising demand for healthcare services.

Extraterritorial organizations and bodies led the pack with an extraordinary 180.05% increase, a sign of Nigeria’s expanding engagement with international entities.

However, not all sectors saw positive growth as the information and communication sector recorded a 23% decline in VAT receipts. This reflects ongoing challenges within certain industries that require more targeted policy interventions.

The Nigerian government has intensified its focus on improving tax compliance and widening the tax base, particularly in the informal sector.

The NBS continues to support these efforts by leveraging data and technology to enhance tax collection systems.

Analysts suggest that the sharp increase in VAT revenue is a sign of the country’s successful tax reform strategies, which have improved collection efficiency and broadened the scope of contributors.

Experts predict that as these efforts continue to take hold, VAT will remain a cornerstone of Nigeria’s fiscal policy, driving economic growth and supporting key infrastructure projects.

With a stronger VAT revenue base, the Nigerian government is positioned to fund critical development programs, reduce reliance on foreign loans, and strengthen its financial standing in the international market.