The Federal Government of Nigeria has strongly countered assertions by Allen Onyema, Chairman and Chief Executive Officer of Air Peace, a leading domestic airline, that impending tax reforms will devastate the aviation sector and cause drastic airfare increases.
Okay News reports that Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, described Onyema’s warnings as misleading and inaccurate regarding the laws set to commence in January 2026.
Onyema had claimed during a television interview that reimposing a 7.5 per cent Value Added Tax on aircraft imports, engines, and spare parts would push domestic economy fares from around ₦350,000 to over ₦1 million.
Oyedele clarified that the reforms address longstanding tax burdens rather than exacerbate them, following extensive consultations with airline operators.
He highlighted the removal of a 10 per cent non-recoverable withholding tax on aircraft leases, previously costing airlines millions in cash flow on typical $50 million deals.
Under the new framework, airlines become fully VAT-neutral, allowing full recovery of input VAT on assets, consumables, and services, with refunds mandated within 30 days.
Existing exemptions on import duties for commercial aircraft, engines, and spare parts remain unchanged, contrary to claims of reversal.
Oyedele noted that even in a worst-case VAT scenario, the impact on ticket prices would be limited to 7.5 per cent, raising a ₦350,000 fare to approximately ₦376,250.
The reforms also pave the way for reducing corporate income tax from 30 per cent to 25 per cent and consolidating multiple profit-based levies into a single Development Levy.
Spokesperson for the Nigeria Civil Aviation Authority, Michael Achimugu, dismissed allegations of airlines paying up to 18 different taxes on domestic flights as unfounded.
He attributed recent fare surges primarily to seasonal demand and supply dynamics rather than tax changes.
