The International Monetary Fund has urged Nigeria to introduce excise duties on telecommunications services and expand Value Added Tax coverage to fuel products as part of efforts to boost government revenue and strengthen public finances.

The recommendation was contained in the IMF’s latest Article IV Consultation Report on Nigeria, which highlighted the need for additional tax policy reforms to create fiscal space for critical development projects and social spending.

According to the Fund, while the implementation of Nigeria’s newly enacted tax laws is expected to improve revenue generation over time, further measures may be required to meet the country’s growing fiscal demands and sustain capital expenditure.

The IMF warned that without stronger revenue growth, the current pace of government investment spending could prove difficult to maintain in the medium term.

The proposal comes at a time when Nigerians are grappling with rising fuel costs and a recent 50 per cent increase in telecommunications tariffs, raising concerns about the potential impact of additional taxes on households and businesses.

“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 IMF, however, noted that any new tax measures should be carefully timed and implemented with consideration for worsening poverty and food insecurity across the country.

Nigeria introduced a 5 per cent excise duty on telecommunications services in 2022 under the administration of former President Muhammadu Buhari as part of efforts to boost non-oil revenue. The levy applied to voice, data and other telecom services, with operators required to remit proceeds to the government on a monthly basis.

At the time, authorities argued that the measure was necessary to address the country’s revenue challenges and reduce dependence on oil earnings.

However, the policy faced strong opposition from telecommunications operators, who warned that the additional tax would increase costs for consumers and place further pressure on the industry.