The Federation Account Allocation Committee (FAAC) has released N1.969 trillion to the federal, state, and local governments from December 2025 revenue collections, marking a distribution bolstered by a dramatic surge in Value Added Tax receipts that offset declining statutory revenues.
The allocation, announced following FAAC’s January meeting, represents funds distributed from Nigeria’s federation account across the three tiers of government, according to a communiqué issued by Mr. Bawa Mokwa, Director of Press and Public Relations at the Office of the Accountant-General of the Federation.
The December distribution tells a story of contrasting revenue trends. While gross statutory revenue fell by N105.202 billion—dropping from N1.736 trillion in November to N1.631 trillion in December—a remarkable 62% jump in VAT collections provided crucial support to overall revenue performance.
Gross VAT revenue climbed sharply to N913.957 billion in December, up from N563.042 billion the previous month. This N350.915 billion increase reflects what analysts suggest may be heightened economic activity during the year-end period, combined with improved tax collection efficiency.
“The strong VAT performance helped cushion the impact of lower statutory revenue in the overall FAAC distribution,” the communiqué noted, highlighting the increasingly important role of consumption taxes in Nigeria’s revenue mix.
From the total gross revenue of N2.585 trillion generated in December, the distributable pool of N1.969 trillion was assembled from three primary sources: statutory revenue contributed N1.084 trillion, VAT provided N846.507 billion, and the Electronic Money Transfer Levy added N38.110 billion.
Before distribution, significant deductions were made from the gross revenue. Collection costs accounted for N104.697 billion, while a substantial N511.585 billion was set aside for transfers, refunds, and savings—routine deductions that reflect the administrative costs of revenue generation and statutory obligations.
Revenue performance across different sectors presented a mixed picture. Companies’ income tax, import duty, and VAT recorded significant gains during the month, indicating robust corporate activity and import volumes. Oil and Gas Royalty, along with CET Levies and Fees, posted marginal growth.
However, declines were registered in excise duty, petroleum profit tax, and EMTL collections, reflecting ongoing challenges in Nigeria’s oil sector and certain regulated industries.
Under Nigeria’s revenue-sharing formula, state governments received the largest single allocation at N706.469 billion, followed by the Federal Government with N653.500 billion and Local Government Councils with N513.272 billion. Additionally, oil-producing states collected N96.083 billion as derivation revenue—13% of mineral revenue, as constitutionally mandated.
The distribution pattern varied significantly by revenue source. From statutory revenue, the federal government’s share was proportionally larger at N520.807 billion, while states received N264.160 billion and local governments received N203.656 billion.
VAT distribution followed a different formula, favoring states and localities: states received N423.254 billion, local governments N296.277 billion, and the federal government N126.976 billion—reflecting VAT’s design as a consumption tax meant to benefit the jurisdictions where economic activity occurs.
The relatively modest EMTL pool of N38.110 billion was similarly distributed, with states receiving N19.055 billion, local governments N13.338 billion, and the federal government N5.717 billion.
This distribution comes at a critical time as all tiers of government face mounting expenditure pressures, from infrastructure development to salary obligations. The strong VAT performance offers some reassurance, though the decline in statutory revenue—particularly petroleum-related collections—underscores Nigeria’s ongoing fiscal vulnerabilities tied to oil sector volatility.
For state and local governments, which collectively received over 60% of the total distribution, these funds represent crucial resources for meeting obligations to workers, contractors, and constituents during a period of elevated inflation and economic adjustment.
The Federation Account Allocation Committee, which comprises representatives from federal, state, and local governments alongside revenue-generating agencies, meets monthly to distribute revenues collected into the federation account in accordance with constitutional provisions.
WHAT YOU SHOULD KNOW
FAAC distributed N1.969 trillion in December 2025 revenue to Nigeria’s three tiers of government, with a striking 62% surge in VAT collections to N913.957 billion offsetting a significant N105.202 billion decline in statutory revenue.
The dramatic shift underscores Nigeria’s growing dependence on consumption taxes rather than oil revenues—state governments received the largest share at N706.469 billion, while the strong VAT performance temporarily masked deeper concerns about falling petroleum-related income that has traditionally sustained the federation account.
