Manufacturing VAT surges 54.7% to N875bn in 9 months
Manufacturing Sector VAT Contributions Surge in Nigeria
By Yinka Kolawole
Nigeria’s manufacturing sector has seen a substantial increase in its contributions to Value Added Tax (VAT), with payments reaching N875.42 billion during the first nine months of 2025. This figure surpasses both the N566.01 billion collected in the same period in 2024 and the N578.39 billion total for the entire 2023 fiscal year.
Year-on-year comparisons indicate a 54.7 percent increase in VAT remittances from manufacturers between January and September 2025. This growth highlights the sector’s rising significance to Nigeria’s non-oil tax revenue framework.
In numeric terms, manufacturers contributed an additional N309.41 billion in VAT in the first nine months of 2025 compared to the equivalent timeframe in 2024. The N875.42 billion reported for 2025 exceeds the entire 2023 VAT contributions by approximately 51.3 percent, signaling a marked increase in tax remittances from this sector.
According to the latest VAT report from the National Bureau of Statistics (NBS), the manufacturing sector accounted for the largest proportion of VAT remittances in the third quarter of 2025, contributing 25.89 percent. This was followed by the information and communication sector at 18.77 percent and mining and quarrying at 14.85 percent. The manufacturing sector also led contributions in the first and second quarters of 2025, with shares of 26.03 percent and 27.19 percent, respectively.
Analysts attribute the rise in VAT contributions to higher product prices, escalating production costs, and currency depreciation, all of which have increased the taxable value of manufactured goods.
Despite facing challenging economic conditions—including elevated energy costs, foreign exchange fluctuations, and declining consumer purchasing power—Nigeria’s manufacturing sector remains a key contributor to VAT revenue. Economists suggest that the rise in VAT payments underscores the sector’s growing fiscal importance as the Federal Government turns increasingly to non-oil taxes to bolster public finances.
However, caution is advised. Analysts emphasize that the increase in VAT remittances may not reflect a corresponding rise in industrial output, as inflation-driven price adjustments and exchange rate factors could have inflated nominal tax collections.
The Manufacturers Association of Nigeria (MAN) has voiced significant concerns regarding the heavy VAT burden on manufacturers. Segun Ajayi-Kadir, Director General of MAN, noted that current tax levels, combined with rising operational costs, are straining companies’ competitiveness and risking job losses.
“The high VAT rate, along with other taxes and levies, makes Nigerian products less competitive both locally and internationally,” Ajayi-Kadir stated. He warned that increases in VAT could lead to reduced demand, accumulating unsold inventory, and diminished profitability for manufacturing firms.
Ajayi-Kadir further expressed that the impact of increased VAT will primarily affect consumers, particularly low- and middle-income earners, potentially undermining the benefits of national minimum wage increases.
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