The Presidential Fiscal Policy and Tax Reforms Committee has said the newly introduced tax laws will ease, rather than worsen, the long-standing cost pressures facing Nigeria’s aviation industry.
In a statement released on Tuesday afternoon by it’s chairman, Taiwo Oyedele, the committee acknowledged the challenges confronting airlines, particularly the burden of multiple taxes, levies and regulatory charges, and noted that engagements with airline operators are ongoing. It maintained that the reforms are intended to address structural cost drivers in the sector, not create new ones.
The committee noted that a major relief is the removal of the existing 10 per cent withholding tax on aircraft leases, which it described as the single biggest tax burden on airlines. Under the new framework, the tax has been replaced with a rate to be set by regulation, creating room for a full exemption or a significantly lower rate.
On value added tax (VAT), it explained that previous VAT suspensions prevented airlines from reclaiming input VAT, embedding additional costs in operations. Under the new laws, airlines will become fully VAT-neutral, with the ability to reclaim VAT on assets, consumables and services, and receive refunds within 30 days where excess input VAT exists.
The committee clarified that existing import duty exemptions on commercial aircraft, engines and spare parts remain fully in place, adding that no new import-related burdens have been introduced.
Addressing concerns over ticket prices, it explained that airline operations are low-margin and that the 7.5 per cent VAT on tickets, within a recoverable VAT system, would have a limited net impact. It stressed that even in a worst-case scenario, fare increases would not exceed the VAT rate.
On corporate taxation, the committee said the new laws provide a framework to reduce corporate income tax from 30 per cent to 25 per cent. It added that several profit-based levies have been harmonised into a single development levy to reduce complexity and improve certainty.
The committee concluded that the tax reforms provide a strong framework to reduce operating costs for airlines and minimise the impact on passengers, adding that sustained engagement with industry stakeholders would help resolve remaining non-tax issues.