Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has dismissed claims that Nigeria’s new tax laws will hurt the aviation industry. Instead, he said the reforms aim to ease the long-standing financial pressures facing airline operators.
In a statement issued on behalf of the Federal Government, Oyedele acknowledged the challenges confronting the sector. However, he stressed that the reforms focus on reducing cost burdens, not increasing them.
Committee engages airline operators
According to the Committee, the aviation sector suffers from multiple taxes, levies, and regulatory charges. Therefore, it said it has engaged extensively with airline operators and other industry stakeholders.
Meanwhile, Oyedele noted that consultations remain ongoing. He added that the feedback received so far has helped shape the final structure of the reforms.
Withholding tax on aircraft leases removed
On aircraft leases, the Committee described the existing 10 per cent withholding tax as the single biggest tax burden on airlines. Under the new tax framework, the government has removed the withholding tax and replaced it with a rate to be set by regulation.
As a result, airlines could enjoy either full exemption or a significantly lower rate. Previously, an airline leasing a $50 million aircraft paid about $5 million in non-recoverable tax, which strained cash flow.
VAT reforms to ease hidden costs
Furthermore, the Committee clarified changes to Value Added Tax (VAT) in the aviation sector. It explained that the temporary VAT suspension after COVID-19 created hidden costs because airlines could not recover input VAT.
Under the new laws, airlines will become fully VAT-neutral. Consequently, they can now claim all input VAT on imported or locally sourced goods and services.
Refunds guaranteed within 30 days
In addition, the law mandates VAT refunds within 30 days, backed by a fully funded refund account. Alternatively, airlines may offset VAT credits against other tax obligations.
According to the Committee, these provisions will significantly improve cash flow and operational stability.
No new import duties introduced
On import duties, Oyedele assured operators that existing exemptions on commercial aircraft, engines, and spare parts remain intact. Therefore, he said the reforms introduce no new burden in this area.
Limited impact on ticket prices
Addressing fears of higher airfares, the Committee said airline operations typically run on thin margins. Nevertheless, it explained that even in a worst-case scenario, a 7.5 per cent VAT would only modestly affect ticket prices.
For example, a ₦125,000 ticket would rise to about ₦134,375, while a ₦350,000 ticket would increase to roughly ₦376,250.
Corporate tax relief for airlines
Meanwhile, the Committee revealed that the new law provides a framework to reduce corporate income tax from 30 per cent to 25 per cent. This reduction, it said, would directly benefit airlines.
In addition, several profit-based levies have been merged into a single Development Levy, thereby reducing complexity and improving certainty.
Tax harmonisation to improve sector
Finally, Oyedele acknowledged the problem of multiple levies imposed on airlines. However, he stressed that the new tax laws did not create these charges.
According to him, tax harmonisation provisions mean the situation will improve from 2026, as the government continues engagement with operators and regulators.
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