IMF Urges Nigeria to Tax Fuel, Telecom Services to Boost Revenue
The International Monetary Fund (IMF) has advised Nigeria to consider extending Value Added Tax (VAT) to petroleum products and introducing excise duties on telecommunications services as part of efforts to increase government revenue and sustain development spending.
The recommendation was contained in the IMF’s 2026 Article IV Consultation Report on Nigeria, released on June 9.
According to the Washington-based institution, recent tax reforms may not be sufficient to support the government’s spending plans over the medium term.
The IMF stated that additional tax measures, including a possible increase in the VAT rate, extension of VAT to fuel products, reduction of certain tax exemptions, and the introduction of telecom excise duties, could help strengthen revenue generation.
According to the report, continued revenue mobilisation is necessary to sustain planned increases in capital expenditure and fund critical development projects and social programmes.
The Fund also highlighted the importance of improving tax administration through digital tools to reduce leakages, improve transparency, and strengthen revenue collection.
However, the IMF cautioned that the timing of any new taxes should take into account Nigeria’s rising poverty levels and food insecurity. It stressed the need for a functional and adequately funded cash transfer system to cushion the impact of reforms on vulnerable households.
While acknowledging improvements in Nigeria’s macroeconomic stability following reforms implemented over the past three years, the IMF noted that economic conditions remain difficult for many citizens.
The report estimates that about 63 percent of Nigerians are living below the national poverty line, while approximately 27 million people experienced food insecurity during the latter part of 2025.
The IMF further warned that rising global prices of fuel, food, and fertiliser could increase inflationary pressures and worsen living conditions, despite boosting export earnings and government revenues.
The recommendation is expected to spark fresh debate over the cost of living in Nigeria, as VAT on petroleum products could increase petrol and diesel prices, while telecom excise duties may lead to higher costs for airtime, voice calls, and internet services if operators transfer the additional charges to consumers.
Notably, telecommunications tariffs were already increased by 50 percent in January 2025 following regulatory approval, resulting in higher costs for voice and data services nationwide.
