The International Monetary Fund (IMF) has advised Nigeria to introduce excise duties on telecommunications services and extend Value Added Tax (VAT) to fuel products to boost government revenue. The recommendations are contained in the IMF's latest Article IV Consultation Report, which states that despite recent tax reforms, additional measures may be needed to fund infrastructure and social programmes. The Fund suggested increasing the VAT rate in the future, reviewing tax exemptions, and strengthening tax administration through digital systems to reduce leakages.
The IMF cautioned that new taxes must be introduced carefully, given the current economic strain on households. Soaring food prices, transport costs, and inflation have deepened the cost of living crisis, especially for low-income families. To cushion the impact, the Fund urged the government to establish a well-funded cash transfer programme before implementing any new levies. Digital technology should also be expanded in revenue collection to improve transparency and compliance. The IMF is already supporting Nigeria through technical assistance in tax and customs reforms.
The advice follows the removal of a 5% telecom excise duty in 2023, which had been introduced under former President Muhammadu Buhari to increase non-oil revenue. The tax faced opposition from telecom operators and consumer groups, with the Association of Licensed Telecom Operators of Nigeria (ALTON) warning it would raise costs for users. The IMF noted that while rising global fuel, food, and fertiliser prices could increase export earnings, they also risk worsening inflation and hardship for poor households. Nigeria's economy is projected to grow by 4.1% in 2026, but poverty levels remain high.
The IMF recommends new taxes on telecom and fuel while acknowledging Nigerians are already struggling with rising living costs. It urged cash transfers before imposing new levies, yet the government has not confirmed any such plan. This creates a disconnect between policy advice and current social protection capacity. Vulnerable households may bear the cost if taxes are introduced without safeguards.
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