The International Monetary Fund (IMF) has urged the federal government of Nigeria to introduce new taxes on telecommunications services and fuel products as part of measures to increase revenue and create more fiscal space for development projects and social programs.
The recommendation was contained in the IMF’s latest Article IV Consultation Report on Nigeria, which outlined additional tax reforms the country may need to sustain public spending and strengthen its finances.
According to the Fund, the implementation of Nigeria’s recently enacted tax laws is expected to improve revenue collection over time.
However, it warned that these measures alone may not be sufficient to meet the country’s growing fiscal needs.
The IMF said further tax policy reforms would likely be required, including the introduction of excise duties on telecommunications services, the extension of Value Added Tax (VAT) to fuel products, and a review of existing tax exemptions and customs duty concessions.
“Further tax policy changes will likely be needed, such as increasing the VAT rate, extending VAT to fuel products, rationalizing tax expenditures in particular VAT exemptions on extractive industries and some customs duties, and introducing telecom excises, to complement administrative gains,” the Fund stated.
The recommendation comes at a time when Nigerians are grappling with rising living costs, higher fuel prices and a recent 50 per cent increase in telecommunications tariffs approved for operators.
While advocating additional revenue measures, the IMF cautioned that the government should carefully consider the impact of any new taxes on vulnerable citizens.
The Fund noted that poverty and food insecurity remain major challenges and advised authorities to ensure that an effective and adequately funded cash transfer program is in place before implementing reforms that could further increase the cost of living.
It also called for wider deployment of digital technology in tax administration to improve revenue collection, reduce leakages and strengthen transparency.
According to the report, digital tools can help government agencies better track, verify and collect revenues while reducing opportunities for corruption.
The IMF said it is already supporting Nigeria’s tax administration reforms through technical assistance programmes, including the deployment of a resident tax administration adviser and customs support through its regional technical assistance centre.
The proposal to reintroduce a telecom tax is likely to generate debate among industry stakeholders. In September 2025, the Federal Government scrapped the five per cent excise duty on telecommunications services that had been introduced under the administration of former President Muhammadu Buhari.
The tax, introduced in 2022, applied to voice and data services and was designed to increase non-oil revenue. Telecom operators were required to remit the levy monthly to the government.
However, the measure faced strong opposition from operators, who argued that the sector was already burdened by multiple taxes and regulatory charges.
The Association of Licensed Telecom Operators of Nigeria had warned that operators were contending with more than 39 different taxes, in addition to the 7.5 per cent VAT and a mandatory two per cent annual revenue contribution to the Nigerian Communications Commission.
The IMF’s latest recommendations are expected to add to the ongoing debate over how Nigeria can raise more revenue without worsening economic hardship for households and businesses already struggling with inflation and rising costs.
(The Sun)
