The Nigeria Revenue Service (NRS) has announced an achievement in oil tax collections, with revenue rising by N1 trillion to N6.8 trillion in 2025.
This marks a 19 per cent increase from the N5.8 trillion recorded in 2024, and it is driven by improved profitability among upstream oil producers, tighter tax compliance, and strengthened enforcement across the petroleum sector.
Official tax collection figures released by the agency, alongside an analysis of documents presented to the Federation Account Allocation Committee between January and December 2025, showed that the increase translates to an absolute growth of about 17.2 per cent when measured against the previous year’s base.
The Service noted that oil tax collections, which include Petroleum Profits Tax, Hydrocarbon Tax, and Company Income Tax from upstream operations, benefitted from improved remittances by international oil companies and joint venture operators, including those linked to the Nigerian National Petroleum Company Limited.
‘For the year 2025, oil tax revenue totalled N6.8 trillion, representing a growth of 19 per cent over the N5.8 trillion realised during the corresponding period in 2024’, the document reads in part.
A breakdown of the oil tax components revealed that Company Income Tax on upstream petroleum activities contributed the largest share, accounting for N7.50 trillion, representing approximately 60.4 per cent of total oil tax revenue.
Petroleum Profits Tax and Hydrocarbon Tax from foreign receipts generated N2.75 trillion, contributing about 22.2 per cent. In contrast, local receipts and remittances from joint venture operations, including those linked to the Nigerian National Petroleum Company Limited, contributed N2.16 trillion, representing 17.4 per cent of the total.
The figures showed significant volatility in monthly collections, with July emerging as the peak month when oil tax revenue surged to N3.75 trillion, accounting for about 30.2 per cent of the annual total.
This was followed by December, which recorded N2.59 trillion or roughly 20.9 per cent of yearly collections. In contrast, January posted the lowest inflow of N365.04 billion, representing just 2.9 per cent of the annual total.
A FAAC month-by-month analysis indicated that in January, oil tax revenue stood at N365.04 billion, made up of N135.61 billion from foreign Petroleum Profits Tax and Hydrocarbon Tax receipts, N117.08 billion from local and joint venture remittances involving the Nigerian National Petroleum Company Limited (NNPCL), and N112.35 billion from upstream Company Income Tax. This represented about 2.9 per cent of total annual oil tax collections.
Collections rose sharply in February to N552.16 billion, reflecting a month-on-month increase of N187.12 billion or 51.3 per cent compared to January. The growth was driven by improved upstream tax payments, particularly Company Income Tax, which rose to N202.39 billion, while foreign tax receipts increased modestly to N147.70 billion.
In March, oil tax collections climbed further to N784.48 billion, representing an increase of N232.32 billion or 42.1 per cent over February. The rise was largely supported by Company Income Tax, which jumped to N377.19 billion, accounting for nearly half of the month’s total collections.
April recorded a dramatic spike in oil tax revenue, which surged to N1.60 trillion, marking an increase of N810.63 billion or 103.3 per cent compared to March. This sharp rise was driven primarily by upstream Company Income Tax payments, which alone contributed N1.26 trillion, accounting for approximately 78.8 per cent of the total oil tax collected in that month.
In May, oil tax revenue declined significantly to N922.12 billion, representing a drop of N672.99 billion or 42.2 per cent compared to April. The decline was largely due to reduced upstream Company Income Tax payments, which fell by more than half from April’s exceptionally high levels.
Collections fell further in June to N507.55 billion, marking a decrease of N414.57 billion or 45.0 per cent from May. The drop was also accompanied by a sharp fall in local Petroleum Profits Tax and Hydrocarbon Tax receipts, which declined to just N12.5 billion, one of the lowest levels recorded during the year.
However, oil tax collections surged dramatically in July to N3.75 trillion, representing the highest monthly inflow of the year. This reflected an increase of N3.24 trillion or 638.3 per cent compared to June. The surge was driven overwhelmingly by upstream Company Income Tax, which contributed N3.09 trillion, accounting for about 82.5 per cent of total oil tax revenue for the month.
In August, collections declined to N2.32 trillion, representing a decrease of N1.43 trillion or 38.2 per cent compared to July. Despite the decline, upstream Company Income Tax remained strong at N1.75 trillion, while foreign and local Petroleum Profits Tax receipts also remained robust.
Oil tax collections dropped sharply again in September to N821.07 billion, representing a fall of N1.50 trillion or 64.6 per cent from August. The decline reflected lower Company Income Tax payments and reduced remittances across both foreign and local tax components.
In October, oil tax revenue fell further to approximately N447.30 billion, marking a decline of N373.77 billion or 45.5 per cent compared to September. This represented one of the weakest monthly performances of the year, largely due to a sharp drop in upstream Company Income Tax to just N29.29 billion.
Collections recovered modestly in November to about N818.31 billion, reflecting an increase of N371.01 billion or 82.9 per cent compared to October. The recovery was driven mainly by improved upstream Company Income Tax payments, which rose to N410.53 billion.
Oil tax revenue surged again in December to N2.59 trillion, representing an increase of N1.77 trillion or 216.8 per cent compared to November. This sharp rise was largely driven by strong upstream Company Income Tax inflows of N1.74 trillion, alongside significantly higher foreign Petroleum Profits Tax receipts, which rose to N794.30 billion.
Overall, the data highlights the highly uneven pattern of oil tax collections during the year, with the difference between the highest and lowest monthly collections standing at about N3.38 trillion, representing a gap of over 926 per cent.
The strong reliance on periodic upstream Company Income Tax payments underscores the continued importance of large-scale petroleum tax settlements in shaping Nigeria’s oil revenue profile.
Non-oil tax revenue, however, recorded even stronger growth, rising from N15.9 trillion in 2024 to N21.5 trillion in 2025, representing a year-on-year increase of N5.6 trillion or approximately 35 per cent. This growth significantly outpaced oil tax expansion and reinforced the government’s ongoing efforts to reduce fiscal dependence on crude oil earnings.
Combined, oil and non-oil tax collections brought total revenue generated by the Service in 2025 to about N28.3 trillion, with oil taxes accounting for roughly 24 per cent of the total, while non-oil revenue contributed about 76 per cent. This marks a major structural shift compared to previous decades when oil-related taxes dominated government finances.
The agency said the strong performance across both segments reflects ongoing tax administration reforms, improved automation, enhanced audit capacity, and stricter enforcement measures targeting tax leakages across multiple sectors of the economy.
Monthly data showed significant volatility in oil tax inflows during the year, with particularly strong collections recorded in July, August, and December, driven largely by large-scale upstream tax settlements and improved remittances from petroleum operators.
The oil tax recovery aligns with broader improvements in Nigeria’s upstream sector, supported by fiscal reforms, asset acquisitions by indigenous producers, and measures introduced to improve transparency and accountability in oil revenue reporting.
Despite the strong growth, the figures also highlight the country’s gradual transition toward a more diversified revenue structure, as non-oil sectors such as financial services, telecommunications, manufacturing, and value-added services increasingly contribute larger shares to government revenue.
While oil taxes remain critical for foreign exchange earnings and budget stability, the faster growth in non-oil revenue reflects the success of reforms aimed at insulating government finances from global oil price shocks.
Nigeria, Africa’s largest oil producer, has historically relied heavily on petroleum revenue to fund public expenditure. However, recurring oil price volatility, declining production, and energy transition pressures have forced authorities to intensify efforts to broaden the tax base and strengthen domestic revenue mobilisation.
The latest figures suggest that while oil remains a key contributor, the balance of Nigeria’s fiscal structure is steadily shifting, with non-oil revenue emerging as the dominant and more stable pillar of government income.
The rise in oil tax revenue came amid a modest recovery in Nigeria’s crude oil production in 2025, highlighting improved fiscal efficiency and stronger upstream earnings.
Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that Nigeria’s average crude oil production improved modestly in 2025, hovering between about 1.4 million and 1.5 million barrels per day, while total oil output, including condensates, averaged roughly 1.6 million barrels per day during the year. The recovery was supported by improved pipeline security, reduced crude theft, and the gradual restart of previously shut-in wells.
Despite the relatively moderate increase in production volumes, oil tax collections grew at a much faster pace, with revenue rising by 19 per cent to N6.8 trillion. This indicates that tax inflows outpaced production growth, reflecting higher profitability among oil producers, improved price realisations, and stricter enforcement by the Nigeria Revenue Service.
Nigeria’s production performance remained below its quota under the Organisation of the Petroleum Exporting Countries for most of 2025, underscoring that the surge in oil tax revenue was driven more by improved compliance, tax settlements, and upstream earnings rather than a dramatic increase in crude output alone.
The development suggests that ongoing fiscal reforms and tighter monitoring of oil companies are enabling the government to capture more value from existing production, even as efforts continue to raise output and stabilise the country’s oil sector.
