Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms, has countered claims by Allen Onyema, Air Peace chief executive officer (CEO), that tax reforms will hurt the aviation industry.
Onyema had said that the Nigeria Tax Act would restore a 7.5 per cent value added tax (VAT) on aircraft imports, engines, and spare parts, and warned that economy fares could rise from about N350,000 to more than N1m.
In a post on his X page, Oyedele said that the reforms had been mischaracterised and were aimed at fixing, rather than worsening, long-standing cost pressures in the aviation sector.
“Contrary to the claim that the new tax laws will hurt the industry, the reform is part of the solution, not the source of the problem. Several long-standing tax issues driving costs in the sector have been resolved in the new tax laws or are being structurally addressed,” he said.
Oyedele acknowledged persistent challenges from multiple taxes and levies in aviation, noting that extensive consultations were held with airline operators before the reforms were finalised.
Addressing aircraft leasing, he identified the existing 10 per cent withholding tax as the heaviest burden on airlines, explaining that it previously increased costs because it was non-recoverable.
“On a $50m aircraft lease, an airline currently pays $5m in withholding tax, which comes straight out of cash flow,” Oyedele said.
“This burden has now been removed and replaced with a rate to be set by regulation, creating a legal basis for either a full exemption or a significantly lower rate. This is a major structural relief for the sector.”
On VAT, Oyedele explained that the earlier suspension carried hidden disadvantages, as airlines could not reclaim VAT on assets, consumables, and operational expenses.
“Under the new tax laws, airlines become fully VAT-neutral. Any VAT paid on imported or locally procured assets, consumables, and services will be fully claimable. Where there is excess input VAT, the law mandates a refund within 30 days or allows it to be offset against other tax liabilities. This directly reduces cost pressure and improves liquidity,” he said.
The committee chairman also rejected suggestions that import duties on aircraft and spare parts were reinstated under the reforms.
“Existing exemptions on commercial aircraft, engines, and spare parts remain fully in place. There is no reversal and no new burden introduced under the reforms,” he stated.
“Even in a worst-case scenario where VAT is not claimable, the maximum impact is 7.5 per cent, not the astronomical figures being suggested. A ₦350,000 ticket would rise to about ₦376,250, not ₦1.7m”.
He added that the reforms would also cut corporate income tax from 30 per cent to 25 per cent and merge several profit-based levies into a single development levy.
“This reduces complexity, improves certainty, and ultimately benefits airlines,” Oyedele said.
While admitting that airlines still contend with multiple charges, Oyedele stressed that these levies were not introduced by the new tax framework.