The 36 states of the federation are set to receive an estimated N5.07tn as their share of Value Added Tax in 2026, following the commencement of a new VAT sharing formula introduced under the National Tax Acts, contained in the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper approved by the Federal Executive Council.
According to the fiscal framework, the implementation of the new National Tax Acts from January 2026 will reduce the Federal Government’s VAT share from 15 per cent to 10 per cent, while the states’ share rises from 50 per cent to 55 per cent, while the Local Governments continue to receive 35 per cent.
However, news men earlier reported that the Nigeria Economic Summit Group warned that the Federal Government could face revenue shortfalls if it does not increase the value-added tax rate as part of the ongoing tax reform process, a statement made by the Chief Executive Officer of NESG, Dr Tayo Aduloju, during an interactive media session in Abuja.
He emphasised that while reforms to the VAT system are essential, maintaining the current VAT rate without an increase could result in a significant loss of revenue for the government, further explaining that the current tax reform process must strike a balance between simplifying the tax system and increasing the VAT rate to maintain revenue stability.
