IMF Recommends Nigeria Extend VAT to Fuel Products and Introduce Telecom Excise Duties to Boost Revenue

The International Monetary Fund (IMF) has recommended that Nigeria may need to extend value-added tax (VAT) to fuel products and introduce excise duties on telecommunications services to raise government revenue, fund development and social spending.

In the IMF’s 2026 Article IV consultation report on Nigeria, the global lender said recent tax reforms may not be enough to sustain the government’s spending plans over the medium term, and that further tax policy changes will likely be needed, including increasing the VAT rate, extending VAT to fuel products, rationalising tax expenditures, and introducing telecom excises to complement administrative gains. 

The fund said continued revenue mobilisation is essential because there is limited room to maintain the federal government’s planned increase in capital expenditure without additional sources of income, and that the implementation of Nigeria’s new tax laws should gradually increase revenue collection. 

However, the IMF warned that the timing of any additional taxes should take into account the country’s worsening social conditions, with poverty reaching 63 percent based on the national poverty line and about 27 million Nigerians estimated to have faced food insecurity in the latter part of 2025.

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