Sectoral Value Added Tax Compliance and Government Revenue Generation in Nigeria

The dominance of Nigeria’s informal sector poses a severe and ongoing challenge to value added tax compliance and government revenue generation across different sectors of Nigerian economy.The main objective was to examine the effect of sectoral value added tax compliance on government revenue generation in Nigeria (2021 to 2025). The independent variable being sectoral value added tax compliance was proxied by manufacturing sector, ICT sector, mining and quarrying sector, insurance and financial services sector and agricultural sector, while the dependent variable being government revenue generation was proxied by total government revenue generation disclosures. The research design adopted for the study was ex post facto. Secondary data was used and the population consisted of annual records of value added tax compliance statistics and government revenue generation reported by Nigeria revenue service, the National bureau of statistics, and the Central Bank of Nigeria from 2021 to 2025 (5 years). Both the population size and the sample size was 25. The data used in this study was analyzed using ordinary least squares regression analysis and the statistical package employed was STATAS version 17. The results of the analysis revealed that manufacturing sector VAT compliance (coeff. = -59.46256 [0.319]) and mining and quarrying sector (coeff. = -107.3359 [0.243]) has negative but statistically insignificant effect on total government revenue in Nigeria, ICT sector (coeff. = 18.0770 [0.013]), insurance and financial services sector (coeff. = 2.0315 [0.025]) and agricultural sector (coeff. = 374.0168 [0.002]) has positive and statistically significant effect on total government revenue in Nigeria. It was concluded that sectoral value added tax compliance has a mixed but generally significant effect on total government revenue generation in Nigeria, Based on the findings of the study, it was recommended that government should strengthen VAT compliance through better monitoring and enforcement, taxpayer education, and digital tax system support key sector, enhance their VAT contributions and improve sustainable government revenue generation in Nigeria.