IMF urges Nigeria to extend VAT to fuel and add telecom excise duties

The International Monetary Fund (IMF) has recommended that Nigeria broaden its value‑added tax (VAT) to include petroleum products and introduce an excise duty on telecommunications services. The advice, part of the IMF’s 2026 Article IV consultation, says additional tax measures are needed to generate revenue, protect fiscal space for development projects and social programmes, and sustain the planned rise in capital expenditure.

The Fund projects that the combined tax reforms could raise about 3.9 % of GDP within three years, with a two‑percentage‑point increase in the VAT rate and the new telecom excise being the biggest contributors. It also stresses that any timing must consider the country’s high poverty rate—around 63 %—and growing food‑insecurity concerns, noting that prior attempts to levy a telecom excise were suspended after public opposition. The IMF highlights that stronger tax administration and digital tools could further boost compliance and revenue.

The recommendations are expected to spark fresh debate over living‑cost impacts, as extending VAT to fuel could raise petrol and diesel prices and a telecom levy could increase airtime and data charges.