VAT revenue drops by 38% in February - FAAC

A sharp 38.3% decline in Value Added Tax (VAT) collections has significantly impacted the federation's distributable pool, as the three tiers of government shared N1.894 trillion for February 2026.

The steep drop saw gross VAT revenue plummet from N1.083 trillion in January to just N668.450 billion in February, representing a loss of over one-third of the previous month's consumption-tax yield.

According to the communiqué issued by the Federation Account Allocation Committee (FAAC) following its March meeting, the total distributable revenue of N1.894 trillion was comprised of 67.3% statutory revenue (N1.274 trillion) and 32.7% VAT revenue (N619.119 billion).

The distribution of the VAT component followed the standard fiscal formula, with the State Governments receiving the lion's share at 55% (N340.515 billion).

Local Government Councils received 35% (N216.692 billion), while the Federal Government retained the remaining 10% (N61.912 billion).

The report further highlighted a broader contraction in the nation's gross earnings, as statutory revenue also fell by 20.2%, dropping from N1.957 trillion in January to N1.561 trillion in February.

Overall, from the total available gross revenue of N2.230 trillion, deductions for cost of collection accounted for 3.5%, while transfers, refunds, and savings swallowed another 11.6%.

The Office of the Accountant General in a statement on Friday noted that while VAT and Companies Income Tax saw substantial percentage decreases, the impact was partially mitigated by significant increases in Oil and Gas Royalties and Excise Duties, alongside a marginal uptick in Import Duty.