Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has dismissed claims by Air Peace Chairman and Chief Executive Officer Allen Onyema that newly introduced tax laws would cripple Nigeria’s aviation industry.
Oyedele said the reforms are aimed at reducing operational costs for airlines and addressing long-standing fiscal challenges in the sector, insisting that the new tax regime should not be blamed for rising airfares or fears of an industry shutdown.
His comments came in response to Onyema’s warning during an interview on Arise Television on Sunday that domestic airlines could collapse within months if the tax reforms, scheduled to take effect from January 1, 2025, are implemented without review.
Onyema had attributed high ticket prices to multiple taxes and levies, claiming that the 7.5 percent Value Added Tax (VAT) on air tickets could push economy fares as high as N1.7 million.
In a statement posted on X on Monday, Oyedele acknowledged the challenges facing the aviation sector but stressed that government engagements with airline operators were ongoing and focused on easing their financial burden.
According to him, a major relief introduced under the new tax laws is the removal of the 10 percent withholding tax on aircraft leases, which had previously increased operating costs for airlines. He explained that the tax, which was non-recoverable in the past, has now been replaced with a rate to be set by regulation, creating room for full exemption or significant reduction.
Oyedele also said the reforms would make airlines fully VAT-neutral, enabling them to recover VAT paid on imported or locally sourced assets, consumables, and services. He added that excess input VAT would either be refunded within 30 days or offset against other tax obligations, thereby improving liquidity for airline operators.
“We recognize 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,” Oyedele said.
“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 or are being structurally addressed under the new tax laws.”
