Nigeria’s manufacturing sector recorded a sharp rise in Value Added Tax (VAT) contributions in 2025, generating N875.4 billion in the first nine months of the year, according to new data.
The figures, released by the , show that VAT remittances from manufacturers increased by 54.7 per cent year-on-year compared to the N566.0 billion recorded during the same period in 2024.
The amount generated between January and September 2025 has already exceeded the N578.4 billion VAT contribution recorded by the sector in the entire 2023 fiscal year.
Manufacturing leads VAT contributions
A sectoral breakdown of the Q3 2025 VAT report shows that manufacturing remained the largest contributor to VAT collections in Nigeria.
The sector accounted for 25.89 per cent of total VAT revenue in the third quarter of 2025, ahead of:
- Information and communication – 18.77%
- Mining and quarrying – 14.85%
Manufacturing also ranked first in earlier quarters, contributing 26.03 per cent in Q1 2025 and 27.19 per cent in Q2 2025, highlighting its growing importance to Nigeria’s tax revenue.
Higher prices driving VAT growth
Industry analysts say the rise in VAT remittances reflects higher product prices, rising production costs and the impact of currency depreciation.
These factors have increased the taxable value of manufactured goods across the supply chain, resulting in higher nominal VAT collections.
Despite operating under difficult economic conditions — including energy shortages, foreign exchange volatility and weak consumer demand — the manufacturing sector continues to play a crucial role in Nigeria’s non-oil revenue generation.
Government reliance on non-oil taxes
Economists say the surge in VAT collections highlights the growing fiscal importance of the manufacturing sector as the Federal Government seeks to diversify revenue sources away from oil.
However, industry stakeholders warn that higher VAT remittances may not necessarily indicate stronger industrial output.
They argue that inflation and exchange-rate effects may have significantly inflated tax collections without a corresponding rise in real production.
Manufacturers raise concerns
The has expressed concern over the growing tax burden on manufacturers.
Director-General warned that rising VAT and multiple taxes could weaken the competitiveness of Nigerian manufacturers.
According to him, higher taxes increase production costs and could force companies to transfer the burden to consumers.
“The high VAT rate, alongside other taxes and levies, makes Nigerian products less competitive both locally and internationally,” Ajayi-Kadir said.
He also cautioned that further increases in VAT could reduce consumer demand, increase unsold inventory, and potentially threaten jobs within the sector.
