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Aviation Key Players React to Nigeria’s of VAT from Commercial Airline Tickets

The VAT removal which was signed by President Muhammadu Buhari had already taken effect from January 1, 2021, which included 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.

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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.

Read also: Aviation: Airline Fares Up 100% And Operating Costs Rise


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.”

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Kenya, IMF in Talks to Renew $1.5bn Facility

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The International Monetary Fund (IMF) has confirmed its talks with Kenyan authorities to renew a 165 billion shilling (about $1.5bn) standby loan facility.

The IMF Director of Communications Department, Gerry Rice, disclosed that the lender was in Kenya in late 2020, reached an agreement in many areas on implementation of the fiscal plan.

“We are in discussions with the Kenyan authorities on the possibility of a programme to support the next phase of their response to the crisis,’’ Rice said in a statement.

“We had a mission there toward the end of last year, and reached an agreement in many areas so that technical work is continuing,’’ he said.

“We hope that will lead to something being presented to our board for consideration in early 2021.’’

The IMF withdrew access to the standby facility in June 2018 after Kenya failed to meet programme objectives such as reducing the budget deficit and modifying interest-rate controls.

An IMF team and the Kenyan authorities had agreed that a reduction in the fiscal deficit to 7.2 per cent of GDP in 2017/18 and further to 5.7 per cent of GDP in 2018/19, down from 8.8 per cent in 2016/17, would be appropriate.

Rice said Kenya continues to face an unprecedented external shock that will severely challenge the economy’s underlying health and the policy path forward.

“We are recommending a pause in fiscal adjustment this fiscal year to accommodate increased health spending and support for the economy during this shock,’’ he said.

“We are also recommending continued supportive monetary policy response, as has been the case in Kenya.’

“As we move beyond the crisis, it will be critical that the authorities resume the pursuit of fiscal sustainability, fiscal adjustment, especially now that the shock has increased the debt vulnerabilities,’’ Rice said.

“We would be talking in those terms about a reduction of the fiscal deficit through a well-balanced policy mix.’’

Kenya’s Treasury said the lack of IMF’s loan facility has badly affected the country’s foreign exchange defence mechanism over the past two years, resulting in a weaker shilling against major international currencies.

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Kenya to Conduct Survey on Diaspora Remittances

The first-ever survey of its kind, will be conducted in February and March, and will be spearheading by the the Central Bank of Kenya (CBK).

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Kenya will next month commission a survey on remittances from its citizens in the diaspora as it seeks to increase the inflows’ support in development and economic growth.

The first-ever survey of its kind will be conducted in February and March and will be spearheaded by the Central Bank of Kenya (CBK).

Kenya’s apex bank will work closely with the Kenya National Bureau of Statistics (KNBS), the Ministry of Foreign Affairs (MFA) and other stakeholders.

“The Survey on remittances aims at collecting valuable information on remittance inflows to Kenya to help guide policy, with the objective of boosting the role of remittances in supporting the economy and livelihoods,” CBK said in a statement on Friday.

The valuable information includes; the efficiency and cost of alternative remittance channels, challenges encountered in remitting cash or non-cash transfers, the availability and flow of information to Kenyans in the diaspora about investment opportunities in Kenya and the usage of remittances received.

Remittances are an important source of foreign exchange and they play a pivotal role in socio-economic development of recipient countries.

Despite the devastation by Covid-19 in the source countries, remittance inflows were strongly buoyant in Kenya in 2020.

The CBK notes that remittances rose to a record high of $3,094 million (Sh340.5 billion) in 2020, from $2,796 million (Sh307.7 billion) the previous year, an increase of 10.7 per cent.

In just of December 2020 alone, remittances reached a historical peak of $299 million (Sh32.9 billion).

“This remarkable growth of remittances has been supported by financial innovations that provided Kenyans in the diaspora more convenient channels for their transactions,” governor Patrick Njoroge has said, on behalf of the CBK.

The Survey on remittances will be an online program conducted in two parts—the first phase will focus on the sources of remittances (remitters and the source countries), while the second phase will target the households that receive remittances.

TheCBK said a link with more information concerning the survey will be circulated widely through various communication channels and will also be available on CBK’s website

North America and Europe make up over 70 per cent of where the diaspora inflows to Kenya are from.

Kenya’s National Treasury has for a while been eager to tap the diaspora market to support economic growth through investments in the country, with a keen focus on the capital market in rising infrastructure development funds.

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NIN Deadline: Telecom Providers Deny Blocking SIM Cards

January 19 is the set deadline for subscribers to link their NIN with their SIM cards while subscribers without NIN have until February 9 to do so.

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Mobile network operators in Nigeria including telecoms giants MTN and Airtel have dismissed all claims by subscribers that their SIM cards are being blocked before the deadline set for the linkage with the National Identity Number (NIN)

The Federal Government through the Nigerian Communication Commission had earlier ordered network providers to deactivate telephone lines of subscribers who failed to link their phones to their National Identity Number.

January 19 is the set deadline for subscribers to link their National Identity Number with their SIM cards while subscribers without NIN have until February 9 to do so.

But some subscribers have complained about the inability to use their lines, suggesting that telcos have started blocking their SIM cards before the deadlines announced by the government.

As a result of this, large crowds resurfaced at the centres of the National Identity Management Commission nationwide after the Yuletide break with many NIN applicants disregarding previous appointment dates given to them by NIMC.

Regarding the large crowds that resurfaced at NIMC offices after the Yuletide break, NIMC Regional Coordinator, Funmi Opesanwo, said, “A lot of applicants complained that their SIM (cards) have been blocked and that is why we are experiencing these large numbers. We are trying to manage the situation.”

When asked about the alleged disconnection of subscriber lines, The Senior Manager, External Relations, MTN Nigeria, Funso Aina, said the operator has not started blocking SIM cards not yet linked with NIN.

“It is not true that we have started blocking SIM cards not linked with National Identity Number,” Aina said.

While commenting on the same issue, Vice President, Corporate Communications & CSR, Airtel Nigeria, Emeka Oparah, also said no subscriber has been blocked yet.

 “Airtel Nigeria is committed to ensuring total compliance with the directives of the Federal Government and the Nigerian Communications Commission on linking NIN with phone numbers. We have not blocked any customer and we will not block any customer at this point in line with the directives.” Oparah said.

Meanwhile, as a result of complaints that followed the large crowds that were seen at its state offices in Lagos and Abuja, NIMC has released a list of over 50 National Identity Number enrolment centres in both cities.

NIMC Spokesman Kayode Adegoke, said the decentralisation will help in decongesting the large gatherings at the state offices in Lagos and Abuja as well as make the NIN registration process more seamless for applicants.

The Presidential Task Force on COVID-19 had expressed displeasure at the large crowds at NIMC offices all over the country while calling on the Minister of Communications and Digital Economy, Isa Pantami, to shut down some NIMC offices over non-adherence to COVID-19 protocols.

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