The International Monetary Fund (IMF) has recommended the introduction of taxes on fuel products and telecommunications services in Nigeria as part of broader measures aimed at increasing government revenue and creating fiscal space for development projects and social interventions.
The recommendation was contained in the IMF’s 2026 Article IV Consultation report on Nigeria, which stated that additional tax measures would be required over the medium term despite recent reforms to the country’s tax system.
According to the Fund, measures such as raising the Value Added Tax (VAT) rate, extending VAT to fuel products, reducing tax exemptions and introducing excise duties on telecommunications services would complement ongoing efforts to improve tax administration and revenue collection.
However, the Washington-based institution cautioned that the timing of any new taxes should take into account the country’s growing poverty levels and worsening food insecurity. It stressed the need for an effective and adequately funded cash transfer system to cushion vulnerable households before implementing such reforms.
The recommendations are expected to spark fresh debate, particularly over fuel prices and telecommunications costs. Previous attempts by the Federal Government to impose a five per cent excise duty on telecom services were met with strong opposition from operators and consumer groups, leading to the suspension and eventual cancellation of the proposal.
Telecom operators had argued that the industry was already facing multiple taxes, rising energy costs, foreign exchange pressures and infrastructure challenges, warning that any additional burden would eventually be passed on to consumers through higher call and data charges.
Similarly, proposals relating to fuel taxation have faced resistance from labour unions and private sector groups amid concerns over rising living costs following the removal of petrol subsidies and increases in transport and food prices.
The IMF said stronger revenue mobilisation efforts would be necessary to support increased public spending and provide assistance to vulnerable Nigerians. It projected that revenue enhancing tax policies could generate additional revenues equivalent to 3.9 per cent of Gross Domestic Product (GDP) within three years, with a two-percentage-point increase in VAT expected to contribute the largest share.
The Fund also projected that reforms to pioneer status incentives, free zone regulations, capital gains taxation and personal income tax structures would further boost revenues. Measures classified under “others,” including telecom excise duties and a carbon tax on fuel, were projected to contribute an additional 0.4 per cent of GDP.
Beyond new taxes, the IMF noted that stronger tax administration could generate another 3.1 per cent of GDP through improved compliance, electronic invoicing, fiscalisation and expanded taxpayer registration.
The IMF projected that the combined impact of revenue enhancing measures, administrative reforms and revenue-reducing policies designed to support households and small businesses would result in a net increase in government revenue equivalent to 4.6 per cent of GDP over the medium term.
The Fund maintained that stronger revenue mobilisation had become increasingly important as Nigeria’s fiscal position remained under pressure despite recent economic reforms.
