The Federal Government, in collaboration with 21 out of Nigeria’s 36 states, has set an ambitious Value-Added Tax (VAT) revenue target of ₦2.5 trillion for the year 2025. This goal is outlined in the respective budget proposals submitted by these states, as part of their financial planning for the upcoming year.
This significant projection comes in the context of President Bola Ahmed Tinubu’s ongoing tax reform proposals, which have sparked widespread debate across the country. Although these reforms are expected to play a crucial role in enhancing revenue collection, the current VAT revenue target does not include the potential additional income that could arise from the successful implementation of these measures. VAT, which is a consumption tax applied on goods and services at each stage of the supply chain where value is added, remains a major source of government revenue.
Recent financial data published by the Federation Account Allocation Committee (FAAC) highlights the growth in VAT revenue under the present administration. Reports indicate that between October 2023 and March 2024, VAT collections increased by ₦549 billion, reflecting the government’s intensified focus on tax efficiency and compliance.
An analysis of the 2025 budget documents from the Federal Government and 21 states reveals a collective VAT revenue target of approximately ₦2.53 trillion. This represents a remarkable 65.8% increase, amounting to an additional ₦1 trillion, compared to the ₦1.527 trillion VAT revenue projection for 2024. This upward adjustment underscores the government’s reliance on VAT as a cornerstone of its revenue-generation strategy.
States in Focus
The 21 states included in the VAT revenue projection are Kebbi, Kaduna, Ekiti, Oyo, Osun, Ogun, Enugu, Borno, Ondo, Kano, Katsina, Ebonyi, Gombe, Anambra, Abia, Niger, Jigawa, Bauchi, Akwa Ibom, Adamawa, and Delta. However, budget data for the remaining 14 states and the Federal Capital Territory (FCT) were not available at the time of this report.
In 2024, the Federal Government recorded VAT revenue of ₦512.8 billion. This figure is expected to nearly double, reaching ₦972 billion in 2025. Similarly, individual states have outlined significant VAT revenue increases in their 2025 budget projections:
Kebbi State: VAT revenue is anticipated to grow from ₦41 billion in 2024 to ₦87.3 billion in 2025.
Kaduna State: The state projects an increase from ₦48.2 billion in 2024 to ₦57.8 billion in 2025.
Ekiti State: VAT revenue is expected to rise to ₦54.9 billion in 2025, compared to ₦52.6 billion in 2024.
Oyo State: Revenue is projected to grow significantly from ₦78.8 billion in 2024 to ₦144 billion in 2025.
Osun State: The state estimates an increase from ₦45.3 billion in 2024 to ₦78.1 billion in 2025.
Other states, including Ogun, Enugu, Borno, Ondo, Kano, Katsina, Ebonyi, and Gombe, have also projected significant growth in VAT revenue for the year 2025, reflecting a broader trend of increased tax collection across the country.
The reliance on VAT as a critical revenue source highlights the government’s ongoing efforts to diversify its income streams. While the debate over President Tinubu’s tax reforms continues, these projections emphasize the administration’s commitment to fiscal sustainability and enhanced revenue generation through consumption taxes.
