The head of Nigeria’s tax reform committee has dismissed claims that new legislation will damage the country’s aviation sector, insisting the laws are designed to lower operating costs and simplify business.
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, said the new laws provide a “strong legal framework” to resolve long-standing issues that have hampered domestic airlines.
The intervention comes amid concerns from operators that a series of fiscal changes could lead to higher ticket prices and further strain an industry already grappling with high fuel costs and currency volatility.
End to ‘heavy’ lease taxes
A key highlight of the reform is the removal of the 10% withholding tax (WHT) on aircraft leases.
Under the old system, a $50 million lease incurred a $5 million tax charge that airlines could not recover, significantly draining their cash flow. Mr Oyedele confirmed this has been replaced with a framework allowing for full exemptions or significantly lower rates.
“Eliminating this burden is a major structural relief for the sector,” Mr Oyedele said in a statement on Monday.
VAT and ticket prices
The Chairman also addressed fears that the reintroduction of Value Added Tax (VAT) would send ticket prices soaring. He argued that while a temporary post-Covid suspension of VAT was popular, it actually created “hidden costs” because airlines could not claim back the VAT they paid on their own expenses (input VAT).
Under the new laws:
- VAT Neutrality: Airlines can now claim back VAT paid on imported parts, fuel, and services.
- 30-Day Refunds: The law mandates that excess tax credits be refunded within a month.
- Price Impact: Mr Oyedele insisted that even in a worst-case scenario, the impact on a N125,000 ($78) ticket would be less than N10,000, far lower than some industry projections.
Lower corporate tax
Beyond aviation-specific levies, the reforms include a plan to reduce general Corporate Income Tax from 30% to 25%.
The government has also moved to harmonise several smaller, “earmarked” levies—such as the Tertiary Education Tax and Police levies—into a single “Development Levy” to reduce the administrative burden on companies.
Tackling ‘multiple charges’
While acknowledging that airlines face a “multiplicity of levies,” Mr Oyedele clarified that these were not created by the new tax laws. Instead, he argued that the new harmonisation provisions would begin to fix the problem from 2026.
“The new tax laws are not the problem; they are a critical part of the solution,” he said, urging industry stakeholders to engage with the government based on “facts” rather than speculation.
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