The Presidential Fiscal Policy and Tax Reforms Committee has dismissed claims that Nigeria’s new tax laws will negatively impact the aviation industry, insisting that the reforms are designed to reduce costs for airlines and strengthen the sector.
In a statement signed by the Committee, the government acknowledged the genuine challenges confronting airline operators, particularly the burden of multiple taxes, levies and regulatory charges, stressing that sustained engagement with industry stakeholders is already yielding results.
“We recognise the genuine challenges facing Nigeria’s aviation industry, particularly the burden of multiple taxes, levies, and regulatory charges. The Presidential Fiscal Policy and Tax Reforms Committee on behalf of the government has engaged extensively with airline operators and those engagements are ongoing,” the Committee said.
The Committee noted that contrary to public claims, the new tax regime is “part of the solution, not the source of the problem,” as several long-standing tax issues driving up airline operating costs have either been resolved or are being structurally addressed.
On withholding tax on aircraft leases, the Committee explained that the existing 10 per cent withholding tax — described as the single biggest tax burden on airlines — has been removed under the new law and replaced with a rate to be determined by regulation.
“This creates the legal basis for either a full exemption or a significantly lower rate,” the Committee said, noting that under the old system, a $50 million aircraft lease attracted a non-recoverable $5 million tax that directly strained airline cash flow.
The Committee also addressed Value Added Tax (VAT), explaining that while the COVID-19-era VAT suspension appeared attractive, it embedded hidden costs because airlines could not recover input VAT on assets, consumables and overheads.
“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,” it stated, adding that excess input VAT must now be refunded within 30 days or offset against other tax liabilities.
On import duties, the Committee assured operators that existing exemptions on commercial aircraft, engines and spare parts remain intact, stressing that no new burden has been introduced.
Addressing concerns about ticket prices, the Committee said airline operations are inherently low-margin and that a 7.5 per cent VAT on tickets, within a fully recoverable VAT system, would have a much lower net impact than feared.
“Even in a worst-case scenario where VAT were not claimable, the maximum impact would still be 7.5 per cent, not the exaggerated price increases being suggested,” the Committee said, explaining that a ₦125,000 ticket would rise to no more than ₦134,375, while a ₦350,000 ticket would not exceed ₦376,250.
The statement further highlighted reforms in corporate income tax, noting that the new law provides a framework to reduce the rate from 30 per cent to 25 per cent, while multiple profit-based levies have been harmonised into a single Development Levy.
“This reduces complexity and ensures certainty for airlines,” the Committee said.
On the issue of multiple levies and charges, the Committee acknowledged the problem but clarified that such charges were not created by the new tax laws.
“It is therefore incorrect to attribute them to the reform. Importantly, the tax harmonisation provisions in the new laws mean the situation can only improve, not worsen, from 2026,” it added.
In conclusion, the Committee maintained that the new tax laws provide a solid legal and policy framework to resolve long-standing tax challenges in the aviation sector, reduce operating costs for airlines and minimise the impact on passengers.
“Claims not grounded in fact do not help this process. The new tax laws are not the problem; they are a critical part of the solution,” the Committee said.
