The Presidential Fiscal Policy and Tax Reform Committee has pushed back against claims that Nigeria’s new tax laws will drive up airfares, insisting the reforms are structured to lower operating costs for airlines from 2026.
The clarification follows concerns raised by Air Peace Chairman Allen Onyema, who warned that the Nigeria Tax Act could trigger sharp fare increases. However, committee chairman Taiwo Oyedele said the reforms address long standing cost pressures in the aviation sector rather than create new ones.
He explained that the most significant relief is the removal of the 10 percent withholding tax on aircraft leases, which previously added millions of dollars in unrecoverable costs to airline balance sheets. Under the new framework, the rate will be set by regulation, allowing for full exemption or a much lower charge.
Oyedele also said airlines will now be fully VAT neutral. Unlike the temporary VAT suspension introduced during COVID 19, the new law allows airlines to reclaim VAT paid on aircraft, spare parts, consumables and services, with refunds mandated within 30 days. This, he noted, improves cash flow and reduces embedded costs.
The committee stressed that existing exemptions on commercial aircraft, engines and spare parts remain unchanged, dismissing fears of a policy reversal.
The News Chronicle understands that sustained engagement is ongoing between government and airline operators to resolve non tax charges and regulatory bottlenecks.
According to the committee, the reforms also open the door for lower corporate income tax and harmonised levies, which should further ease pressure on airlines and limit any impact on passengers as implementation begins in 2026.
