The International Monetary Fund (IMF) has called on the Nigerian government to introduce excise duties on telecommunications services and extend Value Added Tax (VAT) to fuel products as part of a package of revenue-strengthening measures.
The recommendation was contained in the IMF's latest Article IV consultation report on Nigeria, which assessed the country's economic performance and outlined policy options to improve fiscal sustainability.
The Fund stated that Nigeria will require additional tax policy changes over the medium term to generate sufficient fiscal space for development spending and social interventions, warning that the current pace of capital expenditure may not be sustainable without stronger revenue collection.
“Further tax policy changes will likely be needed — such as increasing the VAT rate, extending VAT to fuel products, rationalizing tax expenditures in particular VAT exemptions on extractive industries and some customs duties, and introducing telecom excises — to complement administrative gains,” the IMF said.
However, the Fund cautioned that the timing of any such reforms must account for rising poverty levels and food insecurity. It advised Nigerian authorities to ensure that an effective and well-funded cash transfer system is in place before rolling out additional tax measures that could worsen cost-of-living pressures.
The recommendation arrives at a time of elevated prices for petroleum products and a recently approved 50% increase in telecom tariffs, both of which have squeezed household budgets.
The IMF also urged Nigeria to deepen the use of digital technology in revenue administration to reduce leakages and curb corruption, noting that digitalisation of tax collection systems could significantly improve efficiency. The Fund said it continues to support Nigerian tax administration reforms through technical assistance, including a resident advisor on tax and customs.
This latest advice marks a shift from the government's position last September, when the Federal Government scrapped the 5% excise duty on telecommunications services that had been introduced in 2022 under the previous administration. At the time, telecom operators had argued that the sector was already burdened by more than 39 different taxes, the 7.5% VAT, and a mandatory 2% of annual revenue remitted to the Nigerian Communications Commission.
The IMF's Article IV report also estimated that Nigeria's economy grew by 4% in 2025, with a projected growth rate of 4.1% in 2026, though persistent inflation and elevated food and transport costs continue to weigh on economic activity.
