ABUJA — The International Monetary Fund (IMF) has advised the Nigerian government to implement new tax measures, including excise duties on telecommunications services and the extension of Value-Added Tax (VAT) to fuel products, as part of a medium-term strategy to bolster fiscal revenue and create space for essential development spending.

Key Recommendations from the 2026 Article IV Consultation

The recommendations, outlined in the IMF’s 2026 Article IV Consultation report on Nigeria, emphasize that despite recent tax system overhauls, further policy shifts are required to achieve sustainable revenue mobilization. The Fund’s proposed measures include:

Telecom Excise Duties: Introducing taxes on telecommunications services.

Fuel Taxation: Extending VAT to fuel products.

VAT Adjustments: A proposed two-percentage-point increase in the overall VAT rate.

Rationalization of Exemptions: Removing VAT exemptions in the extractive industries and reviewing customs duties.

Administrative Reforms: Leveraging digitalization, electronic invoicing, and database consolidation to improve tax compliance and curb revenue leakages.

The IMF projects that these tax policy changes, coupled with administrative improvements, could net an increase in government revenue equivalent to 4.6 per cent of GDP over the medium term.

A Warning on Timing and Social Impact

Acknowledging the sensitivity of these proposals, the IMF cautioned that the government must carefully manage the timing of any new taxes. Given Nigeria’s elevated poverty levels and ongoing food insecurity, the Fund stressed that any additional fiscal measures must be preceded by a well-funded, effective cash transfer system to protect the most vulnerable citizens from increased cost-of-living pressures.

Public and Industry Backlash

The recommendations have already sparked significant resistance. Nigerian subscribers and industry advocacy groups have pushed back against the proposed telecom tax, citing the sector's already heavy tax burden which reportedly includes over 40 different levies and the likelihood that such costs would be passed directly to consumers through higher data and call charges. Similar concerns have been raised regarding fuel taxation, with labor unions and private sector groups warning of the potential for further spikes in transport and food inflation.

The IMF acknowledged these concerns, noting that the country's economic conditions remain difficult for many Nigerians. The Fund remains in dialogue with Nigerian authorities, providing technical assistance to support the government's broader fiscal and economic management goals.