Consumption, transaction taxes drive Nigeria’s Nov. 2025 revenue, but targets missed

Nigeria’s tax system in November 2025 remained heavily reliant on consumption- and transaction-based revenues, with Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL), and stamp duties collectively contributing about N612.13 billion to federally collected funds.

Data presented to the Federation Account Allocation Committee (FAAC) this December showed that these revenues accounted for roughly 45.3 per cent of the N1.35 trillion total collected by the Federal Inland Revenue Service (FIRS) during the month.

Analysts noted that this underscores the growing significance of digitally traceable and consumption-linked taxes in Nigeria’s fiscal structure.

Despite the sizable collections, the total fell short of the monthly target of N1.94 trillion by N590.81 billion, representing a performance level of 69.6 per cent.

Collections were also lower than in October, reflecting pressures across several major tax heads.

Among the transaction-based revenues, VAT remained the largest contributor, bringing in N563.04 billion—about 41.7 per cent of total federal revenues for the month.

The bulk of this, N405.54 billion, came from import VAT, while N157.50 billion derived from non-import sources.

The dominance of import VAT highlighted the sensitivity of Nigeria’s VAT performance to trade flows, exchange rate movements, and customs efficiency, with import taxes accounting for nearly 72 per cent of total VAT receipts.

Electronic Money Transfer Levy collections, which mirror the growing formalisation of financial transactions, reached N43.40 billion in November, representing 3.2 per cent of total FIRS collections.

While modest compared with VAT, the levy has become a stable revenue stream, benefiting from the expansion of digital payments across the banking sector.

Stamp duties added N5.68 billion during the month.

Though small in absolute terms, they formed part of the broader pool of transaction-based taxes that contributed significantly to overall federal revenue.

Together, VAT, EMT levy, and stamp duties made up just over 45 per cent of total collections, highlighting the central role of consumption- and transaction-linked taxes in Nigeria’s revenue mix.

In contrast, oil-related taxes—including petroleum profits tax and hydrocarbon tax—generated N407.58 billion, or about 30.2 per cent of total collections, down from the previous month due primarily to lower receipts from Production Sharing Contracts (PSCs).

Companies’ income tax and other non-oil taxes, including capital gains tax and additional stamp duties, contributed N336.59 billion, roughly 24.9 per cent of total revenues, but fell significantly below the monthly target, missing expectations by over 60 per cent.

The November performance reinforced VAT’s position as the single most important revenue source for the month, accounting for 41.7 per cent of total collections and outpacing both oil taxes and companies’ income tax.

The combined 45.3 per cent contribution of VAT, EMT levy, and stamp duties indicated a clear, gradual shift toward revenues linked to consumption, imports, and digital financial activity, a move aligned with ongoing policy efforts to broaden the tax base, improve compliance, and reduce overdependence on volatile oil revenues.

However, the overall shortfall against targets, with collections falling 30.4 per cent below the benchmark, revealed persistent structural and cyclical challenges.

Heavy reliance on import VAT also raises concerns about sustainability, given exposure to exchange rate fluctuations, import compression, and potential trade policy shifts.

Analysts said the strong performance of VAT and electronic transaction taxes reflects improvements in tax administration, digital monitoring, and enforcement.

Yet the relatively small size of stamp duty receipts and the modest share of the EMT levy indicate that Nigeria still has significant untapped potential in fully leveraging transaction-based taxes as the digital economy expands.