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…Surpasses 2023 full-year figure
By Yinka Kolawole
The contribution of Nigeria’s manufacturing sector to Value Added Tax (VAT) in 2025 significantly increased with payments rising to N875.420 billion in the first nine months of the year (9M’25), surpassing both the N566.011 billion recorded in the corresponding period of 2024 (9M’24) and the N578.394 billion generated in the entire 2023 fiscal year.
Comparative analysis of the figures shows that VAT remittances from manufacturers grew by 54.7 per cent year-on-year between January and September 2025, reflecting increased tax remittances across the industrial value chain and the sector’s growing importance to Nigeria’s non-oil tax revenue base.
In absolute terms, manufacturers paid N309.409 billion more VAT in the first nine months of 2025 compared with the same period in 2024.
The N875.420 billion recorded in just nine months of 2025 also exceeds the entire 2023 VAT contribution of N578.394 billion by about 51.3 per cent, indicating a sharp acceleration in tax remittances from the sector.
Sectoral analysis of the Q3 2025 VAT report just released by the National Bureau of Statistics (NBS) shows that the top three activities with the largest shares in Q3 2025 were: Manufacturing with 25.89%; Information and communication with 18.77%; and Mining and quarrying with 14.85%.
The manufacturing sector was also the top contributor to VAT in Q1’25 with 26.03% and 27.19% in Q2’25.
Industry analysts attribute the increase partly to higher product prices, rising production costs, and currency depreciation, which have raised the taxable value of manufactured goods across the supply chain.
Despite operating under challenging macroeconomic conditions – including high energy costs, foreign exchange volatility, and weak consumer purchasing power – the manufacturing sector has continued to rank among the largest contributors to VAT revenue in Nigeria.
Economists say the surge in VAT payments underscores the sector’s expanding fiscal significance at a time when the Federal Government is increasingly relying on non-oil taxes to support public finances.
However, analysts caution that the rise in VAT remittances does not necessarily reflect a proportionate expansion in industrial output, noting that inflation-driven price adjustments and exchange-rate effects may have significantly inflated nominal tax collections.
Meanwhile, the Manufacturers Association of Nigeria (MAN) has expressed deep concerns on the high burden of Value Added Tax (VAT) on the manufacturing sector, despite acknowledging its importance for government revenue.
Director General of MAN, Segun Ajayi-Kadir, warned that the current tax levels, coupled with rising operational costs, are putting intense pressure on companies, hindering competitiveness, and risking job losses.
“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 cautioned the Federal Government against raising VAT, arguing it would lead to a demand crunch, increase unsold inventory, and potentially reduce the profitability of manufacturing concerns.
“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.