International Monetary Fund (IMF) has advised Nigeria to consider imposing Value Added Tax (VAT) on petroleum products and introducing excise duties on telecommunications services as part of efforts to increase government revenue and sustain public spending.
Gatekeepers News reports that the recommendation was contained in the IMF’s 2026 Article IV Consultation Report on Nigeria, which assessed the country’s economic outlook and fiscal position.
According to the IMF, recent tax reforms undertaken by the Federal Government are a step in the right direction, but may not generate sufficient revenue to support planned increases in capital expenditure and social programmes over the medium term.
The Fund said additional measures such as raising the VAT rate, extending VAT to fuel products, reducing certain tax exemptions, and introducing telecom excise duties may be required to complement ongoing revenue administration reforms.
The Washington-based lender noted that stronger revenue mobilisation has become increasingly important as the government seeks to fund infrastructure projects, development programmes and social interventions.
It estimated that the proposed revenue-enhancing measures, alongside improved tax administration, could significantly increase government earnings over the next few years.
However, the IMF cautioned that the timing of any new taxes must take into account the economic realities facing Nigerians. The Fund acknowledged rising poverty and food insecurity levels in the country and stressed that an effective and adequately funded cash transfer programme should be in place before additional consumption taxes are introduced.
The recommendation has already sparked concerns among economists, industry stakeholders and consumer groups. Critics argue that extending VAT to fuel products could further increase transportation and living costs, while a telecom excise duty could lead to higher prices for calls, airtime and internet services as operators pass the additional costs on to subscribers.
A previous attempt to impose a five percent excise duty on telecommunications services was withdrawn following widespread opposition from operators and consumers.
Despite these concerns, the IMF maintains that Nigeria needs stronger revenue-generation measures to sustain economic reforms and finance development priorities. The Fund also urged authorities to deepen the use of digital technologies in tax administration to improve compliance, reduce leakages and strengthen revenue collection.
