Manufacturers Pay N875bn VAT in 9 Months as Tax Contribution Jumps 54.7%

Nigeria’s manufacturing industry boosted its Value Added Tax (VAT) contribution in 2025, with total remittances rising to N875.420 billion between January and September (9M’25).

The amount is significantly higher than the N566.011 billion recorded in the corresponding period of 2024 and also exceeds the N578.394 billion paid during the entire 2023 fiscal year.

Data analysis shows that VAT payments from the manufacturing sector grew 54.7 percent year-on-year in the first nine months of 2025, underscoring stronger tax compliance and the sector’s increasing relevance to Nigeria’s non-oil revenue generation.

In absolute terms, manufacturers remitted N309.409 billion more VAT compared with the same period in 2024.

The N875.420 billion generated within nine months of 2025 is also about 51.3 percent higher than the total VAT paid by the sector in 2023, indicating a sharp rise in tax collections.

According to the National Bureau of Statistics (NBS) Q3 2025 VAT report, manufacturing remained the biggest contributor to VAT during the third quarter with 25.89 percent.

Other major contributors included:

• Information and communication – 18.77%
• Mining and quarrying – 14.85%

Manufacturing also maintained its lead in earlier quarters, accounting for 26.03 percent of VAT revenue in Q1 2025 and 27.19 percent in Q2 2025.

Experts say the increase in VAT payments may be linked to rising production costs, higher product prices and currency depreciation, which have pushed up the taxable value of manufactured goods.

Despite operating under challenging economic conditions — such as expensive energy, foreign exchange instability and reduced consumer spending power — the sector continues to rank among Nigeria’s top VAT contributors.

Economists believe the rise in VAT payments demonstrates the growing fiscal significance of the manufacturing sector, especially as the government seeks to strengthen public finances through non-oil tax revenues.

However, analysts caution that the surge in VAT collections does not necessarily reflect stronger industrial production. They argue that inflation and exchange-rate adjustments may have inflated nominal tax figures.

The Manufacturers Association of Nigeria (MAN) has also raised concerns about the increasing VAT burden on manufacturers.

MAN Director General Segun Ajayi-Kadir warned that the current tax levels, combined with rising operating costs, are placing serious strain on businesses and could threaten jobs.

“The high VAT rate, along with other taxes and levies, makes Nigerian products less competitive both locally and internationally, especially when compared to foreign goods,” he said.

MAN has consistently advised the Federal Government against increasing VAT, arguing that such measures could reduce consumer demand, increase unsold stock and weaken profitability.

“The burden of increased VAT is directly shifted to consumers, which hurts low- and middle-income earners and could negate the positive impact of national minimum wage increases,” Ajayi-Kadir added.

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