The International Monetary Fund (IMF) has recommended that Nigeria introduce taxes on fuel products and telecommunications services to boost government revenue and create fiscal space for development spending and social interventions.
The recommendation is part of the IMF’s 2026 Article IV Consultation report on Nigeria, which argues that additional tax measures are needed despite recent tax system overhauls.
The IMF suggests increasing the Value Added Tax (VAT) rate, extending VAT to fuel products, and introducing telecom excise duties to generate revenue. However, it cautions that the timing of reforms must consider Nigeria’s rising poverty and food insecurity.
The proposed taxes have sparked debate, with concerns over the impact on living costs. A previous attempt to introduce a 5% excise duty on telecom services faced opposition and was eventually scrapped.
Telecom companies argue they’re already burdened by multiple taxes, energy costs, and infrastructure challenges, and that additional levies would be passed on to consumers.
The IMF projects that revenue-enhancing tax policies could generate 3.9% of GDP within three years, with administrative reforms yielding an additional 3.1% of GDP.
Measures like fiscalisation, electronic invoicing, and tax identification registration could improve compliance and reduce informality in the economy.
The Fund acknowledges that some recent tax reforms will reduce revenue in the short term but argues that stronger revenue mobilisation is crucial for Nigeria’s fiscal position.
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