Amid ongoing debates over proposed tax reform bills, the Federal Government, alongside 21 states, has projected a combined Value Added Tax (VAT) revenue of approximately N2.5 trillion for 2025.
This estimate, which marks a significant increase from the N1.527 trillion projected in 2024, does not account for any additional funds that may arise from the contentious tax reforms currently under consideration.
VAT, a consumption tax applied at each stage of the supply chain, has seen substantial growth under the current administration. Recent financial reports indicate that VAT revenue surged by N549 billion within just six months, highlighting the government's efforts to enhance non-oil revenue streams.
The analysis of budget documents reveals that the Federal Government's share of VAT revenue is expected to rise from N512.8 billion in 2024 to N972 billion in 2025.
State projections vary significantly; for instance, Kebbi anticipates a jump in VAT revenue from N41 billion to N87.3 billion, while Oyo State expects its revenue to nearly double from N78.8 billion to N144 billion.
States such as Ogun and Enugu have also forecasted increases in their respective VAT collections, reflecting a broader trend of rising expectations across the federation.
As discussions continue regarding the proposed increase in the VAT rate from 7.5% to 10%, stakeholders are wary of potential inflationary impacts.
