Title: States’ VAT Allocation Jumps to ₦551.77bn in January as New Tax Formula Takes Effect Date Published: 04 March 2026 Description: Nigeria’s 36 states recorded a sharp rise in Value Added Tax (VAT) receipts in January 2026, collectively earning ₦551.77 billion from the ₦1.08 trillion generated nationwide, following the implementation of the Federal Government’s new tax laws.Data presented by the Nigeria Revenue Service to the Federation Account Allocation Committee showed that the January allocation represented a 30.4 per cent increase from the ₦423.25 billion shared among states in December 2025.The January disbursement marked the first major revenue sharing under the revised VAT formula, which reduced the Federal Government’s share to 10 per cent from the previous 15 per cent. Under the new framework, states now receive 55 per cent of net VAT, up from 50 per cent, while the allocation to local governments remains unchanged at 35 per cent.According to the FAAC figures, total VAT collection for January stood at ₦1.08 trillion, up significantly from ₦913.96 billion recorded in December. After deductions at source amounting to ₦79.9 billion, net VAT available for distribution was ₦1.00 trillion.From the net VAT pool, the Federal Government received ₦100.32 billion, representing 10 per cent, while states received ₦551.77 billion and local governments ₦351.13 billion. In comparison, under the old 15 per cent formula, the Federal Government earned ₦126.98 billion from VAT in December, indicating a decline of ₦26.65 billion, or about 21 per cent, in January.The new sharing arrangement proved favourable to states, whose combined VAT allocation rose by ₦128.52 billion month-on-month. Local governments also recorded an increase, receiving ₦351.13 billion in January compared to ₦296.28 billion in December, an 18.5 per cent rise.Meanwhile, the cost of VAT collection rose to ₦43.33 billion in January, a 32.4 per cent increase from ₦32.72 billion in December. Other statutory deductions included three per cent to the North East Development Commission project account, which increased to ₦31.20 billion, and 0.5 per cent to the Revenue Mobilisation Allocation and Fiscal Commission, which rose to ₦5.42 billion.Combined deductions to the NEDC and RMAFC amounted to ₦36.61 billion in January, up from ₦30.89 billion in December. Overall, total funds available for distribution across all revenue lines in January stood at ₦3.04 trillion, with total deductions of ₦1.14 trillion, leaving net distributable revenue of ₦1.90 trillion.Of the distributable amount, ₦896.78 billion came from statutory revenue, while ₦1.00 trillion was net VAT. Combined allocations from VAT and statutory revenue saw the Federal Government receive ₦525.23 billion, states ₦767.29 billion, local governments ₦517.28 billion, while the 13 per cent derivation fund stood at ₦90.19 billion.A breakdown of VAT distribution showed that Lagos State remained the highest beneficiary, with a gross VAT allocation of ₦111.22 billion. After deductions of ₦9.89 billion, the state retained ₦101.34 billion, while its local governments received ₦70.57 billion. Oyo and Rivers followed with ₦24.04 billion and ₦23.57 billion respectively, while Kano received ₦17.37 billion and Abuja ₦15.76 billion. Other states recorded allocations ranging between ₦9 billion and ₦15 billion, reflecting varying levels of economic activity and consumption across the federation. Attached Images: 782ec5ecfbcc6177398f1d883a6f5b8a11d7477dc3e8d4f90c3c99d6ab4073f6.jpg Attached Video: None