After several yearnings of the domestic airlines for the removal of Value Added Tax (VAT) on air transport operations as contained within the just introduced Finance Act, the Nigerian Federal Government has finally granted the domestic airlines request.
The VAT removal which was signed by President Muhammadu Buhari had already taken effect from January 1, 2021 and included the exemption of commercial airline tickets from VAT, has brought great relief to Nigeria’s airline operators who had previously lamented the negative impact of many VAT charges on their cost of operations.
Reacting to the positive development, the managing director of Afrijet Airlines, Alhaji Mohammed Tukur, expressed gratitude to the Buhari led government for granting this long-time request.
Going down the memory lane, Alhaji Tukur cited how the domestic airlines right from the administrations of past Presidents Olusegun Obasanjo, Late Umaru Musa Yar’Adua, and Goodluck Jonathan had demanded for the removal of many unfavorable taxes impeding the progress of the local airlines.
He said prior to now, other modes of transport like railway and maritime had been exempted from paying unnecessary taxes, excluding airlines.
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While expressing joy over the removal of VAT from airline tickets, Alhaji Tukur appealed that similar action is taken on other taxes with particular emphasis on the necessity for the government to exempt incoming airlines from paying taxes within the first six months of their operations.
In his reaction, the managing director of Centurion Aviation Security and a member of Aviation Round Table, Retired Group Captain John Ojikutu said: “Exemption of VAT has been long overdue but not the tickets sales charge (TSC). VAT is the responsibility of the passenger, not the airlines while (TSC) is that of the airlines.
“While the previous is 7.5 percent the latter is 5 percent; I have suggested that the landing and parking charges on services at airports be reviewed according to the category grading of the airport, he said.”
“I suggested grading the airports into four, A to D. While Category A will have the very best charge, Category D will be charged less. These are what the airlines should do, and not contest VAT on tickets.”
“A passenger who pays for economy class instead of business or first class pays less VAT and saves himself some monies, not the airlines. There is still the cost of fuel for the airlines to contend with, Ojikutu said.”
Other key players who reacted to the VAT removal have commended the govt whilst they alerted air travelers to the event saying: “Next time you fly, cross-check that you simply are not wrongly charged VAT. Hopefully, airfares should come down.”
