New Tax Laws Will Help Airlines, Not Hurt Them—Presidential Tax Committee

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, says Nigeria’s new tax laws are meant to support the aviation sector and reduce operating costs, not make flying more expensive.

His comments came after Air Peace Chairman and CEO, Allen Onyema, raised concerns in a Sunday interview on Arise News about the Nigeria Tax Act and other fiscal changes expected to begin in January 2026. Onyema warned that the reforms could bring back a 7.5% VAT on aircraft imports, engines and spare parts, charges that were suspended in 2020 during COVID-19, and that this could push ticket prices sharply higher.

“The Reform Is Part of the Solution”

In a statement shared on X on Monday, Oyedele said the committee understands the pressure airlines face, including multiple taxes, levies and regulatory charges. He added that the committee has held detailed discussions with airline operators and that several cost-driving tax problems are being addressed.

According to him, it is wrong to blame the new tax laws for issues that have existed for years. He insisted the reforms are designed to ease the burden and improve the way taxes affect airline operations.

1) Relief From Withholding Tax on Aircraft Leases

Oyedele said one of the biggest tax problems for airlines has been the 10% withholding tax on aircraft leases under the old system. He explained that this has now been removed and replaced with a rate that will be set by regulation, creating room for a full exemption or a much lower rate.

He noted that under the old rule, an airline leasing a $50 million aircraft could pay $5 million in withholding tax, and that money cannot be recovered, so it directly increases costs and puts pressure on cash flow. Removing that burden, he said, is a major relief.

2) VAT Changes That Improve Cash Flow

Oyedele also addressed the VAT debate. He said the VAT suspension introduced during COVID-19 looked helpful at the time, but it created a “hidden cost” because airlines could not claim back VAT paid on other inputs such as consumables, overheads and some assets. That meant VAT became part of operating costs.

Under the new tax laws, he said airlines will become VAT-neutral, meaning VAT paid on imported or locally purchased items and services will be claimable. He added that where an airline has excess input VAT, the law provides for a refund within 30 days, supported by a funded tax refund account and an option to offset credits against other tax obligations.

3) Import Duty Exemptions Stay

Oyedele said exemptions on commercial aircraft, engines and spare parts remain in place. According to him, the new reforms do not remove those exemptions and do not introduce fresh import-duty burdens on these items.

4) Ticket Prices: “The Real Impact Is Smaller Than People Think”

He said airline business is naturally low-margin, but added that a 7.5% VAT on tickets, within a system where input VAT is fully recoverable, will not produce the extreme price spikes being circulated.

He argued that even if VAT could not be recovered in a worst-case scenario, the maximum direct effect would still be 7.5%. He gave examples: a ₦125,000 ticket would rise to not more than ₦134,375, while a ₦350,000 ticket would rise to not more than ₦376,250—far below the kind of jumps being suggested.

5) Corporate Income Tax and Levy Harmonisation

Oyedele said the new law creates a framework to reduce corporate income tax from 30% to 25%, which would benefit airlines. He added that several profit-based levies—such as Tertiary Education Tax, NASENI, NITDA and Police-related levies—have been merged into a single development levy. This, he said, will reduce complexity and bring more certainty to businesses.

6) Multiple Levies and Charges: “Not Created by the New Tax Laws”

Oyedele acknowledged that airlines face many levies and charges, but said these are not introduced by the new tax laws. He argued that it is unfair to blame the reform for those long-standing costs.

He added that government is working with operators and relevant agencies to find a lasting solution, and that the harmonisation provisions in the new laws should improve the situation from 2026, not worsen it.