Nigerian govt removes VAT from aviation services, airfares

The Federal Government has suspended the deduction of 7.5 per cent Value Added Tax (VAT) on airfares and other air transport services with effect from January 1, 2021, as contained in the 2020 Finance Act recently signed by President Muhammadu Buhari.

A tweet by a member of the bill drafting committee, Taiwo Oyedele, on Wednesday, January 6, confirmed the suspension which is coming three years after a similar suspension.

The Buhari-led administration had, in June 2018, issued an executive order on the suspension of VAT in air transport, with the Federal Inland Revenue Service (FIRS) claiming to be unaware of such a directive, hence it was never implemented.

Airline operators had complained that Nigeria is the only country that still charges VAT on air transport services.

The VAT plus 36 other charges, according to the airlines, account for at least 40 per cent of total revenue and N10 billion in taxes yearly, leaving the airlines heavily indebted and in financial distress or both in most cases.

Chief Executive Officer (CEO) of Med-View Airlines Plc, Muneer Bankole, said he heard of the then removal but that it was never implemented.

Read also: Senate wants 1% VAT revenues committed to rebuilding Lagos, others damaged during #EndSARS protests

“Since we heard about it, we have started talking to FIRS, but they are still chasing us to pay VAT,” Bankole said.

He added that though the removal is a good intention by the government, nothing has really changed to realign Nigerian aviation with global best practices.

“Definitely, you know that commercial operations like airlines have international connections; you don’t pay VAT anywhere in the world. So, let us do the right things here. All these charges, VAT and taxes, don’t apply to aviation because they don’t help the airline business. That is why our airlines are nose-diving and government agencies just sit down looking.

“The regulatory agencies should get out of this colonial approach. Every government agency should go out, fend to get money, and work as a real service provider. That is the way to go.

“When you say you are committed to paying five per cent to this, four per cent to that, three per cent to another, and so on, then you are still in the colonial era,” Bankole said.

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now