The International Monetary Fund (IMF) has advised Nigeria to consider new taxes on fuel products and telecommunications services as part of a broader strategy to strengthen public finances and expand government revenue.
The recommendation forms part of the IMF’s 2026 assessment of Nigeria’s economy, where the institution noted that additional fiscal measures may be required to support government spending, social welfare programmes, and long-term economic development despite ongoing tax reforms.
The Fund argued that Nigeria’s recent tax overhaul represents a significant step toward improving revenue collection but maintained that further policy adjustments may be necessary to close fiscal gaps and reduce pressure on public finances.
According to the IMF, potential measures include extending Value Added Tax (VAT) coverage to fuel products, introducing excise duties on telecommunications services, reviewing existing tax exemptions, and streamlining customs-related incentives. Brandspur Banking News Desk reports that the proposed reforms are intended to broaden the tax base and improve revenue generation over the medium term.
The Washington-based lender, however, stressed that any new tax measures should be introduced carefully, taking into account the country’s rising cost of living, food insecurity concerns, and the need to protect vulnerable households through effective social support systems.
The proposal is expected to reignite debate over taxation in key sectors of the economy. Previous attempts to impose excise charges on telecom services faced strong resistance from industry operators and consumer groups, who argued that additional taxes would increase service costs for subscribers.
Industry stakeholders have consistently maintained that telecom companies already contend with multiple levies, infrastructure challenges, foreign exchange volatility, and elevated operating expenses, making new taxes potentially burdensome for both businesses and consumers.
Fuel-related taxation proposals have also generated concerns among labour unions and private-sector organisations, particularly following subsidy removal reforms that contributed to higher transportation and living costs nationwide.
The IMF estimates that revenue-enhancing tax measures could generate additional government income equivalent to 3.9 per cent of Nigeria’s Gross Domestic Product within three years. A higher VAT rate was identified as one of the most significant potential contributors to revenue growth.
Other proposed reforms include adjustments to capital gains taxation, changes to personal income tax structures, the review of investment incentives, and the implementation of a minimum tax framework for large multinational companies.
The Fund also highlighted the importance of improving tax administration, arguing that stronger compliance systems, digital invoicing, expanded taxpayer registration, and better enforcement mechanisms could deliver substantial gains without relying solely on new taxes.
While some recently enacted tax reforms may reduce revenue in the short term by offering relief to households and small businesses, the IMF projects that the combined effect of policy reforms and administrative improvements could significantly strengthen Nigeria’s revenue position over the coming years.
The institution concluded that enhanced revenue mobilisation remains critical as the country seeks to finance development priorities, strengthen social safety nets, and maintain fiscal sustainability amid ongoing economic challenges.
