Airline Operators of Nigeria, AON, have stopped remittance of Value Added Tax (VAT) to the Federal Government with effect from June 14.
AON had two weeks ago after its meeting attended by chief executives of privately owned domestic airlines took the decision to suspend VAT remittance, saying aviation was the only mode of transportation paying tax.
The operators also alleged that government continued to use the VAT paid by the domestic carriers to subsidise their competitors. VAT is the five per cent levy payable on goods and services.
With regards to aviation, the five per cent VAT is applicable on the cost of ticket sold to passengers.
DailyTrust reports that 25,000 passengers travel daily across 22 airports. With an average one-way ticket value of N22,000, the expected VAT remittance to the coffers of the government amounts to over N25m.
Airline sources said the decision to suspend VAT remittance with effect from yesterday was in the interest of the travelling public and that there was no going back on the decision.
CEO of Top Brass Airline, Capt. Roland Iyayi, who addressed newsmen at the May 31, meeting, said, “The AON’s position is that the VAT on airline ticket sales for domestic carriers must be removed completely forthwith as road transportation, rail, marine and international air travel carriers are not subjected to VAT”.
The Federal Executive Council (FEC) had last week announced two executive orders removing VAT on some items.
Minister of Finance, Kemi Adeosun, said, “Majority of the provisions approved today are actually removing the tax burden and clarifying obsolete and ambiguous areas of tax. So, for example, for VAT, there is to be an exemption for residential property, leases on rental, transport for the general public and life insurance.”
It was, however, not clear if the provision would apply to the aviation sector.
However, aviation analyst, Chris Aligbe, said the decision by airline operators to suspend VAT remittance was in order, saying the carriers, as well as the passengers, had suffered a lot.
“It is something that is good for the industry,” he said, pointing out however that the Minister of State for Aviation, Sen. Hadi Sirika, had pushed for it.
