Nigeria's VAT Reform Yields Record State Funding and Federal Tax Surge

In the first half of 2026, Nigerian state governments received N2.37 trillion in Value Added Tax (VAT) allocations, a 23.5 % rise over the same period in 2025. The increase followed the adoption of a new VAT sharing formula that cut the federal government's share to 10 % and raised the states' share to 55 %, shifting roughly N219.72 billion from federal to state coffers. Out of the N4.39 trillion of VAT collected in the six‑month period, states obtained N2.37 trillion, local councils N1.51 trillion and the federal government N0.43 trillion.

At the same time, the Nigeria Revenue Service reported federal tax revenue of about N21.6 trillion for H1 2026, up roughly 51 % from N14.27 trillion in H1 2025. The surge is attributed to the broader tax reforms, digitalisation of tax administration and tighter controls on oil‑related revenues introduced under President Bola Tinubu's administration. Together, these figures signal a significant uplift in both state and federal fiscal resources driven by the recent tax policy changes.