LAGOS, Nigeria — The International Monetary Fund (IMF) has advised Nigeria to introduce excise duties on telecommunications services and extend Value Added Tax (VAT) to fuel products as part of broader measures to strengthen government revenue and create fiscal space for development spending.
Okay News reports that the recommendation was contained in the IMF’s latest Article IV Consultation report on Nigeria, coming amid skyrocketing fuel prices and a recent 50% hike in telecom tariffs.
“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 stated.
The Fund said robust implementation of Nigeria’s newly signed tax laws should gradually improve revenue collection but warned this alone may not be sufficient to meet the country’s fiscal needs over the medium term.
The IMF stressed that the timing of such reforms must take into account rising poverty levels and food insecurity across the country, advising 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 Fund also urged Nigeria to deepen the use of digital technology in revenue administration to reduce leakages and curb corruption vulnerabilities, noting that leveraging digitalisation to track, verify, and collect government revenues could significantly improve tax efficiency. The IMF said it is continuing to support Nigerian authorities on tax administration reforms through technical assistance, including the deployment of a resident advisor on tax administration and customs support from its regional technical assistance centre.
The Federal Government scrapped a 5% excise duty on telecommunications services in September 2025 to ease cost pressures for millions of Nigerian subscribers. The tax was originally introduced in 2022 under the Buhari administration as part of efforts to raise non-oil revenue, covering both voice and data services. The Association of Licensed Telecom Operators of Nigeria (ALTON) had argued that companies were already struggling with more than 39 different taxes, a 7.5% VAT, and a mandatory 2% contribution of annual revenue to the Nigerian Communications Commission (NCC).
The IMF estimated that Nigeria’s economy grew by 4% in 2025 and projected growth at 4.1% in 2026, despite persistent inflationary pressures and higher transportation and food costs weighing on economic activity. The Fund noted that rising global prices of fuel, food, and fertilizer are expected to improve Nigeria’s export earnings and fiscal revenues but could also intensify inflationary pressures and worsen hardship for vulnerable households.
