The International Monetary Fund (IMF) has advised the Federal Government of Nigeria to consider introducing new taxes on telecommunications services and fuel products as part of broader efforts to enhance revenue generation and create additional fiscal space for development and social intervention programmes.
The recommendation was contained in the IMF’s latest Article IV Consultation Report on Nigeria, where the Fund acknowledged ongoing tax reforms but warned that current measures may not be sufficient to address the country’s growing fiscal demands.
According to the report, while recently enacted tax laws are expected to improve revenue collection over time, additional policy reforms may be required to strengthen public finances. The IMF suggested measures such as imposing excise duties on telecommunications services, extending Value Added Tax (VAT) to fuel products, reviewing tax exemptions, and rationalising customs duty concessions.
The Fund noted that these reforms would complement ongoing administrative efforts aimed at improving tax collection efficiency and reducing revenue leakages.
“Further tax policy changes will likely be needed, including increasing the VAT rate, extending VAT to fuel products, rationalising tax expenditures, particularly VAT exemptions on extractive industries and selected customs duties, as well as introducing telecom excise duties,” the report stated.
The recommendation comes at a period when many Nigerians are already facing rising living costs, higher fuel prices and increased telecommunications charges following the recent tariff adjustments approved for network operators.
While advocating additional revenue measures, the IMF cautioned that policymakers must carefully weigh the social implications of such reforms. The Fund stressed that poverty and food insecurity remain significant challenges and advised the government to strengthen social protection programmes before implementing policies that could further increase the cost of living.
Specifically, the IMF recommended the establishment of a well-funded and effective cash transfer system to cushion vulnerable households from the impact of future fiscal reforms.
The report also highlighted the importance of digital technology in modernising tax administration. According to the IMF, digital tools can improve revenue monitoring, strengthen compliance, reduce leakages and enhance transparency across government agencies.
The Fund disclosed that it is currently supporting Nigeria’s tax administration reforms through technical assistance programmes, including the deployment of a resident tax administration adviser and customs-related support through its regional technical assistance centre.
The proposal to reintroduce taxes on telecommunications services is expected to generate fresh debate within the industry. In September 2025, the Federal Government scrapped the five per cent excise duty on telecom services that had been introduced in 2022 under the administration of former President Muhammadu Buhari.
That levy applied to voice and data services and was designed to boost non-oil revenue. However, telecom operators strongly opposed the measure, arguing that the industry was already burdened by multiple taxes and regulatory charges.
Industry stakeholders, including the Association of Licensed Telecom Operators of Nigeria (ALTON), had previously maintained that operators contend with more than 39 different taxes and levies, in addition to the 7.5 per cent VAT and the mandatory two per cent annual contribution to the Nigerian Communications Commission (NCC).
The IMF’s latest recommendations are likely to intensify discussions on how Nigeria can expand its revenue base without placing additional pressure on households and businesses already struggling with inflation and rising operating costs.
