Banks, insurance companies, Pension Funds Administrators and other financial institutions in the country, contributed N314.10 billion to the total sum of N3.31 trillion generated as domestic (local) Value Added Tax (VAT) payments by the Federal Inland Revenue Service (FIRS)-as the Nigeria Revenue Service (NRS) was then known- in the first nine months of 2025, findings by New Telegraph show. The amount is 40.41 per cent, or N90.40 billion, higher than the N223.69 billion that the sector contributed as VAT in the corresponding period of 2024.

According to “Sectoral Distribution of Value Added Tax” reports for Q1-Q3-2025 released by the National Bureau of Statistics (NBS), of the total sum of N3.31 trillion generated as local payments VAT between January and September last year, financial and insurance services contributed the sum of N106.09 billion in Q1; N97.15 billion in Q2 and N110.86 billion in Q3.

By contrast, the VATBanks, insurance companies, Pension Funds Administrators and other financial institutions in the country, contributed N314.10 billion to the total sum of N3.31 trillion generated as contribution from financial and insurance services in the first nine months of 2024 stood at N65.62 billion in Q1; N82.55 billion in Q2’24 and N75.51 billion in Q3. Further analysis of data obtained from the NBS shows a steady increase in VAT collection by banks and other financial institutions between 2020 and 2024 compared to earlier years.

Specifically, the data indicates that VAT sectoral collection for financial and insurance activities stood at N24.77 billion in 2020, N67.91 billion in 2021, N109.3 billion in 2022, N215.8 billion in 2023 and N303.45 billion in 2024. Analysts attribute the significant increase in VAT collections by financial institutions from 2021 till date, to factors such as, the Federal Government’s raising of the VAT rate from 5 percent to 7.5 per cent in February 2020, the expansion of digital financial services and the country’s high rate of inflation.

New Telegraph reports that in its bid boost revenue, the Federal Government had proposed to increase VAT from 7.5 per cent to 10 per cent under its comprehensive tax reforms, which resulted in the signing into law of four new Acts- the Nigeria Tax Act (NTA) 2025, the Nigeria Tax Administration Act (NTAA) 2025, the Nigeria Revenue Service (Establishment) Act (NRSEA) 2025 and the Joint Revenue Board (Establishment) Act (JRBEA) 2025- in June last year.

However, the proposal was rejected by the National Assembly, meaning that under the country’s new tax laws, which took effect from January this year, the VAT rate was left unchanged at 7.5 per cent.