Taxation is a critical instrument for revenue generation and economic growth in nations worldwide, serving as a vital mechanism for mobilizing internal resources. In Nigeria, the three-tiered tax structure—comprising federal, state, and local governments—facilitates the collection of revenue to support government obligations and promote societal welfare. Among the various taxes, Value Added Tax (VAT) has emerged as a significant source of indirect taxation, levied at specific stages in the sale of goods and services. The adoption of VAT in Nigeria followed recommendations from a 1991 study group on indirect taxation, leading to the enactment of Decree 102 of 1993, which replaced the earlier Sales Tax Decree of 1986. This study examines the impact of VAT on Nigeria’s economic growth, highlighting its role in enhancing government revenue, stimulating economic activities, and fostering an environment conducive to development. By analyzing the historical evolution, administration, and effectiveness of VAT, the research underscores the importance of a well-structured tax system in achieving sustainable economic growth and social equity. The findings provide insights for policymakers on optimizing VAT administration to maximize economic benefits while ensuring equitable distribution of resources.