States Receive N2.37 Trillion VAT Allocation Under New Tax Regime

State governments received a total of N2.37 trillion in Value Added Tax (VAT) allocations during the first half of 2026, following the implementation of Nigeria’s new VAT revenue sharing formula.

The figure represents an increase of N451.25 billion, or 23.48 percent, compared to the N1.92 trillion shared among states during the same period in 2025. Overall, N4.31 trillion in VAT revenue was distributed among the Federal Government, states and local government councils between January and June 2026.

The increase followed the implementation of the new tax regime, which raised the states’ share of VAT from 50 percent to 55 percent, while the Federal Government’s share was reduced from 15 percent to 10 percent. Local governments retained their 35 percent allocation.

Economic experts welcomed the increase but urged state governments to ensure transparency and prudent use of the additional revenue by investing in critical sectors such as infrastructure, agriculture and public services rather than relying solely on statutory allocations.

The Nigeria Economic Summit Group and the International Monetary Fund also cautioned that while the reforms strengthen state finances, the Federal Government could face revenue shortfalls unless alternative revenue sources are developed or the VAT rate is reviewed in the future.