Business
IMF Recommends New Fuel and Telecom Taxes to Boost Nigeria’s Revenue
The International Monetary Fund (IMF) has advised the Federal Government of Nigeria to consider introducing additional taxes on fuel products and telecommunications services as part of efforts to strengthen public revenue and support long-term economic development.
The recommendation was contained in the IMF’s 2026 Article IV Consultation report on Nigeria, which outlined several fiscal measures aimed at increasing government income to fund infrastructure projects, social interventions, and support for vulnerable populations.
According to the report, the proposed measures include extending Value Added Tax (VAT) to fuel products, introducing excise duties on telecommunications services such as calls and data, increasing the VAT rate, and reviewing selected tax exemptions and customs duty waivers.
The IMF stated that further tax policy reforms may be necessary to improve revenue generation and strengthen Nigeria’s fiscal position over time.
However, the Fund cautioned that any new tax measures should be introduced carefully, considering the country’s current economic realities, including rising poverty levels and food insecurity. It emphasised the need to ensure that social protection systems, particularly cash transfer programmes, are adequately funded and operational before implementing such reforms.
The recommendation has already raised concerns among stakeholders. Telecommunications operators have warned that additional taxes could lead to higher costs for voice and data services, while labour groups and business organisations continue to oppose fuel-related tax increases amid persistent inflation and rising transportation and food costs following fuel subsidy reforms.
The IMF estimated that the proposed tax measures could generate an additional 3.9 per cent of Nigeria’s Gross Domestic Product (GDP) within the next three years. It also noted that improvements in tax administration and compliance could contribute a further 3.1 per cent of GDP.
Overall, the Fund projects that despite relief measures targeted at households and small businesses, the broader reform package could increase government revenue by approximately 4.6 per cent of GDP over the medium term.
The IMF maintained that stronger domestic revenue mobilisation remains essential as Nigeria seeks to manage fiscal pressures and sustain ongoing economic reforms.
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