The Federal Government is considering an increase in excise duties on alcohol, tobacco and other “sin goods” as part of broad tax and revenue reforms linked to a $750m World Bank financing programme.
This was disclosed in the World Bank’s Implementation Status and Results Report on the Nigeria Accelerating Resource Mobilisation Reforms Programme-for-Results facility. The report noted that Nigeria’s excise rates on alcohol and tobacco remain “very low” and that steps are underway to review and raise them from 2026.
Nigeria currently operates a hybrid excise system on alcohol and tobacco, combining ad valorem and specific taxes. A 2020 tax summary published by PwC showed that alcoholic beverages such as beer, wine and spirits attract a 20 per cent ad valorem duty alongside specific charges per litre, while cigarettes are taxed at 20 per cent ad valorem plus a specific levy per stick.
Although this structure places Nigeria among countries using mixed excise regimes, overall tax incidence on these products remains low compared with international public health benchmarks.
Documents obtained by The PUNCH further revealed that the Tariff Review Board has endorsed proposed increases in excise duties on beer, stout, wines, whisky and tobacco products for the 2026–2028 period. The proposal is expected to be forwarded to the Minister of Finance to ensure implementation from January 2026.
Under the programme’s Disbursement Linked Results framework, a presidential order raising excise duties on sin goods has been identified as a key reform action, though it is currently classified as “not due.” However, the World Bank noted that policy work to support the increase is progressing.
According to the report, relevant agencies plan to adopt a framework for higher health-related taxes effective January 2026, even though inter-agency consultations remain at an early stage.
The reforms are part of Nigeria’s broader effort to boost non-oil revenue, reduce dependence on volatile oil earnings and strengthen fiscal sustainability under the World Bank-supported programme.
The $750m facility, approved in June 2024 and effective from October 2024, runs until November 2028. The report showed that Nigeria has already exceeded a major revenue benchmark under the programme, with Value Added Tax collection rising to 2.30 per cent of non-oil GDP by December 2024, surpassing the 1.80 per cent target set for 2027.
The World Bank attributed the improvement to the introduction of VAT withholding in sectors such as telecommunications and banking, enhanced taxpayer education and the removal of what it described as an “implicit foreign exchange subsidy.”
However, compliance indicators were mixed. Online on-time VAT filing fell to 32 per cent in 2024 from 41 per cent in 2023, despite an increase in the number of taxpayers filing on time. Expected VAT filers rose from about 2.51 million in 2023 to 3.63 million in 2024, while on-time online filers increased to roughly 1.17 million.
Company Income Tax compliance showed a similar pattern, rising sharply to 41.5 per cent in early 2025 before easing to 34 per cent as the taxpayer base expanded.
The report also highlighted progress on excise and environmental taxation, though it acknowledged delays and policy disagreements. While Nigeria lacks green taxes on many environmentally harmful products, the Tariff Review Board has agreed to reinstate a green surcharge on vehicles as part of a fiscal policy package expected to be submitted to the President in early 2026.
In addition, the Nigeria Tax Act 2025 introduced a five per cent carbon levy on petroleum products, pending regulations from the finance ministry. The World Bank noted that consensus had not yet been reached on some green excise proposals, including measures affecting heavy vehicles.
On oil revenue transparency, the report showed uneven progress. Although the Federal Account Allocation Committee approved a revised reporting template for the Nigerian National Petroleum Company Limited in March 2025, implementation has been slow, raising concerns about meeting key programme performance indicators.
Overall implementation of the reform programme was rated “moderately satisfactory,” though overall risk remained high. Of the 27 disbursement-linked results under the facility, six had been achieved, while 19 were assessed as making good progress.
As of January 2026, about $109.9m—roughly 14.7 per cent—of the $750m loan had been disbursed. The facility is scheduled to close in November 2028.
Commenting on the development, development economist and Chief Executive Officer of CSA Advisory, Dr Aliyu Ilias, said the World Bank’s push for higher excise duties was expected given Nigeria’s commitment to the loan framework. While noting that the tax hike could boost revenue and contribute to GDP growth, he expressed concern about Nigeria’s growing reliance on external policy conditions.
Meanwhile, the Minister of Industry, Trade and Investment, Jumoke Oduwole, confirmed that the Tariff Review Board met earlier in January 2026 to align trade, fiscal and monetary policies. She said the session emphasised the need for competitive markets, support for local industry and stronger monitoring of incentives to ensure balanced and growth-driven tariff decisions.
