Nigeria’s Presidential Fiscal Policy and Tax Reforms Committee has said the newly enacted tax laws are designed to address long-standing challenges in the country’s aviation sector, particularly the burden of multiple taxes and rising operating costs faced by airlines.
In a statement shared via X by the committee’s chairman, Taiwo Oyedele, the panel acknowledged the genuine difficulties confronting airline operators but dismissed claims that the reforms would worsen the situation. According to the committee, the new tax framework forms part of a broader solution aimed at stabilising and strengthening the sector.
The committee said it has been engaging airline operators and other industry stakeholders through extensive consultations, noting that discussions are ongoing to ensure a smooth transition. It stressed that several tax-related cost drivers affecting aviation have either been resolved or structurally addressed under the new laws.
One major relief highlighted is the removal of the withholding tax previously imposed on aircraft leases. The committee explained that the charge had significantly increased operating costs for airlines and strained cash flow, as it was non-recoverable. Under the new regime, the tax has been replaced with a rate to be determined by regulation, creating room for either a full exemption or a substantially lower charge.
The committee also disclosed that airlines will become fully VAT-neutral under the reforms. This means value-added tax paid on imported or locally sourced assets, consumables, and services can now be claimed, improving liquidity and reducing hidden costs. It added that the law mandates VAT refunds within a defined timeframe where excess input VAT exists, supported by a funded refund mechanism or tax offsets.
Addressing concerns over ticket prices, the committee said airline operations are typically low-margin and that the VAT impact on fares would be lower than widely speculated, given the recoverability of input VAT. It added that existing exemptions on commercial aircraft, engines, and spare parts remain intact, with no new import duties introduced.
The reforms also provide a pathway for reducing corporate income tax, while several profit-based levies have been harmonised into a single development levy to simplify compliance and reduce administrative burdens.
While acknowledging the existence of multiple levies imposed on airlines, the committee clarified that these were not introduced by the new tax laws. It noted that government engagement with relevant agencies and operators is ongoing to address non-tax charges.
The committee expressed confidence that the harmonisation measures in the new tax laws would lead to improved conditions in the aviation sector over time, urging stakeholders to rely on facts as reforms take effect.
