Federal, States and LGAs Share N2.3 Trillion in May as VAT Revenue Drops by N62.9 Billion – FAAC

The Federation Account Allocation Committee (FAAC) has distributed a total of ₦2.300 trillion to the Federal Government, state governments, and the 774 local government councils as revenue allocation for May 2026, despite a notable decline in Value Added Tax (VAT) collections during the period.

The allocation was approved at the June 2026 FAAC meeting held in Abuja and announced through a communiqué released by the committee. According to the statement, the distributable revenue consisted of ₦1.611 trillion from statutory revenue and ₦688.785 billion from VAT proceeds.

FAAC disclosed that total gross revenue available for May stood at ₦3.395 trillion. From this amount, ₦123.546 billion was deducted as the cost of collection, while ₦971.610 billion was earmarked for transfers, interventions, and refunds.

A breakdown of the allocation shows that the Federal Government received ₦818.680 billion, while state governments shared ₦759.141 billion. Local government councils received ₦534.277 billion, while ₦188.132 billion, representing 13 percent derivation revenue from mineral resources, was distributed to eligible oil-producing states.

The committee reported that gross statutory revenue increased significantly during the month, rising to ₦2.651 trillion from ₦2.378 trillion recorded in April. This represents an increase of ₦273.623 billion, reflecting stronger collections from several key revenue sources.

However, VAT performance weakened in May. Gross VAT revenue fell to ₦743.668 billion from ₦806.617 billion recorded in April, representing a decline of ₦62.949 billion. The drop in VAT receipts was one of the major revenue setbacks recorded during the month.

From the distributable VAT pool of ₦688.785 billion, the Federal Government received ₦68.879 billion, while states received ₦378.832 billion and local government councils received ₦241.075 billion.

FAAC further noted that revenue inflows from Companies Income Tax (CIT), Capital Gains Tax (CGT), Stamp Duties, Petroleum Profit Tax (PPT), Hydrocarbon Tax, oil and gas royalties, and import duties recorded significant increases in May. Conversely, collections from VAT, excise duties, and CET levies declined during the period.

The latest allocation underscores the continued importance of federation revenues to the finances of all three tiers of government, even as fluctuations in VAT and other non-oil revenue streams remain a key concern for fiscal managers. Analysts say sustaining growth in statutory revenue while broadening the non-oil tax base will be crucial to maintaining strong monthly allocations in the months ahead.