The Federal Government may raise excise duties on alcohol, tobacco, and other so-called “sin goods” as part of sweeping tax and revenue reforms tied to a $750m World Bank financing programme, according to an official implementation report on the facility.
The World Bank, in its Implementation Status and Results Report on the Nigeria Accelerating Resource Mobilisation Reforms Programme-for-Results financing, said Nigeria’s excise rates on sin goods remain “very low”, but concrete steps are now underway to review and increase them, with effect from 2026 under the reform programme.
A 2020 tax summary published on the website of PwC shows that Nigeria operates a hybrid excise duty regime on alcohol and tobacco, combining ad valorem rates with specific levies.
According to the summary, alcoholic beverages, including beer, wines, and spirits, attract a 20 per cent ad valorem excise duty alongside specific charges per litre, while cigarettes are subject to a 20 per cent ad valorem duty plus a specific tax per stick.
PwC noted that the structure places Nigeria among countries using mixed excise systems, though overall tax incidence on alcohol and tobacco remained relatively low compared with global public health benchmarks at the time.
Newsmen further noted that the Tariff Review Board has already endorsed increases in excise rates on beer and stout, wines, whisky, and tobacco products for the 2026 to 2028 period, according to the document obtained from the World Bank.
It added that the proposal was expected to be presented to the Minister of Finance to ensure the new rates take effect from January 2026. Under the programme’s Disbursement Linked Results framework, a presidential order increasing excise duties on sin goods is identified as a key reform action, although it is classified as “not due” at this stage.
The document noted, however, that policy work to support the move is progressing.
It stated, “Excise rates on sin goods [are] very low,” adding that relevant agencies “have plans to adopt a framework to increase health taxes effective January 2026,” even though joint discussions were still at an early stage.
The reform push is anchored in Nigeria’s efforts to raise non-oil revenues, reduce dependence on volatile oil income, and strengthen fiscal sustainability under the World Bank-supported programme.
The $750m financing, approved in June 2024 and effective from October 2024, runs until November 2028. Beyond sin taxes, the report showed that Nigeria has already surpassed a major revenue benchmark under the programme.
Value Added Tax collection as a share of non-oil GDP rose to 2.30 per cent as at December 2024, exceeding the programme’s target of 1.80 per cent for 2027. The World Bank attributed this performance to the introduction of VAT withholding in key sectors such as telecommunications and banking, taxpayer education, and the removal of what it described as an “implicit FX subsidy”.
However, while revenue ratios improved, compliance indicators told a more complex story. Online on-time VAT filing compliance fell to 32 per cent in 2024 from 41 per cent in 2023, despite an increase in the absolute number of taxpayers filing on time.
According to the report, expected VAT filers rose from about 2.51 million in 2023 to 3.63 million in 2024, while online on-time filers increased from just over one million to about 1.17 million. The expansion of the taxpayer base, the World Bank said, led to a lower compliance percentage.
On oil revenue transparency, the report revealed mixed progress. While the Federal Account Allocation Committee approved a revised reporting template for the Nigerian National Petroleum Company Limited in March 2025, implementation has been slow.
The document said the finance ministry reported during a subsequent review that the new template had not yet been used. It stated that FAAC had issued a directive to NNPCL to submit revenue reports with “minimum contents including detailed information on (i) the use of Domestic Crude Allocation, (ii) existing liabilities, (iii) forward crude oil sales, and (iv) outstanding fiscal and regulatory (such as gas flare) payments”.
The World Bank warned that delays in applying the revised template posed a risk to achieving one of the programme’s key performance indicators, which tracks the number of enhanced NNPCL reports submitted to FAAC.