In a significant shift for Nigeria’s fiscal landscape, the 36 state governments received a combined N551.77 billion as their share of the N1.08 trillion in Value Added Tax (VAT) collected in January 2026. This represents a 30.4 percent increase compared to N423.25 billion in December 2025.

This surge marks the first major distribution under the federal government’s newly implemented tax laws. With the new tax laws, the federal government receive only 10 percent of net VAT, as against the 15 percent previously allocated. While the state governments share increase to 55 percent as against the 50 percent in old law. Local government share of the net VAT remains at 35 percent.

According to the VAT collections by the Nigeria Revenue Service, presented to Federation Account Allocation Committee(FAAC), the total VAT collections stood at N1.08 trillion in January 2026, a sharp incease compared to N913.96 billion collections in December 2025. The total net VAT further dropped to N1 trillion after deductions at source which stood at N79.9 billion.

Of this total collection, the Federal government received N100.32 billion being 10 percent of the net VAT, state government share at 55 percent stood at N551.77billion while Local Governments received N351.13 billion.

In December, under the old 15 per cent formula, the Federal Government’s VAT share stood at N126.98bn. The January allocation of N100.32bn, therefore, represents a decline of N26.65bn, or about 21 per cent, compared with what the Federal Government received in December.

For states, the impact of the new formula was positive. Their collective share rose to N551.77 billion in January from N423.25bn in December, an increase of N128.52billion, equivalent to 30.4 percent.

Local Governments received N351.13 billion in January, up from N296.28billion in December, representing 18.5 percent.

Also, the NRS recorded an increased cost of collection, which stood at N43.33billion in January, a 32.4 percent increase from N32.72billion recorded in December.

Other statutory deductions included 3 per cent to the North East Development Commission Project Account, which rose toN31.20billion fromN26.32billion. The 0.5 per cent deduction to the Revenue Mobilisation Allocation and Fiscal Commission increased to N5.42billion fromN4.57billion.

Combined, the NEDC and RMAFC deductions totalled N36.61billion in January compared with N30.89billion in December, reflecting a month-on-month increase of N5.72billion. The broader FAAC summary showed that total funds available for distribution in January across revenue lines stood at N3.04 trillion.

Total deductions amounted to N1.14trillion, leaving a total net distributable revenue of N1.90trillion. Of this amount, N896.78billion came from statutory revenue, while N1.00trillion was net VAT. When VAT and statutory revenue were combined, the Federal Government’s total allocation stood at N525.23billion.

State governments received N767.29billion, local governments got N517.28billion, while the 13 percent derivation share amounted to N90.19billion.

A breakdown of VAT distribution among states showed that Lagos remained the dominant beneficiary. The state’s gross VAT allocation for January stood at N111.22billion.

After a deduction of N9.89bn, Lagos retained N101.34billion as state net VAT. Its local governments collectively received N70.57billion.

Oyo ranked second with N24.04billion in gross VAT allocation, while Rivers followed with N23.57billion. Kano received N17.37billion, and the FCT-Abuja was allocated N15.76billion. Bayelsa received N15.07billion. Other top beneficiaries included Katsina with N13.82billion, Jigawa with N12.92billion, Delta with N12.89billion, and Kaduna with N12.73billion.

States with lower allocation includes; Ebonyi with N9.45billion allocation, Ekiti wuth N9.83billion allocation, Taraba with N9.37billion, and Nasarawa with N9.77billion allocation. (BusinessDay)