The Federal Government has reaffirmed its commitment to the full implementation of the new Tax Reforms Act, which is scheduled to take effect on January 1, 2026, despite mounting opposition from key players in the aviation sector and international bodies.
Speaking at a virtual business forum held on Thursday, stakeholders in the Nigerian aviation industry expressed concerns over the implications of the new tax laws. The event, titled “Nigeria Tax Act (2025) & The Aviation Industry: Aviation Sector Enlightenment Initiative,” was jointly organized by Aviation & Allied Business in collaboration with the Federal Inland Revenue Service (FIRS).
During the session, Mrs. Nkechi Umegakwe, Assistant Director at the Nigeria Revenue Service (formerly FIRS), made it clear that the reforms are final and will be enforced across all sectors, including aviation. She stated that the new policy removes existing exemptions on the payment of Value Added Tax (VAT) for airline operators and allied businesses.
Currently, airlines operating in Nigeria enjoy exemptions from import duties and VAT on commercial aircraft, engines, spare parts, and air tickets. Under the 2026 reforms, these exemptions will no longer apply.
“Whatever you bring in as an airline—aircraft, engines, spare parts—you must pay VAT on them from January 1, 2026,” Umegakwe said, noting that although VAT refunds will be possible within 30 days of a formal request, operators are now expected to fully comply with the new law.
Umegakwe defended the reforms, stating that the changes were developed after extensive due diligence. She said the reforms are intended to enhance government revenue, simplify the tax structure, and create a more efficient and digitized compliance process through mechanisms like digital invoicing and VAT tracking.
She added that the harmonization of various taxes into a unified VAT system would help eliminate inconsistencies and promote fairness in the business environment.
IATA Condemns VAT Policy, Cites Treaty Violations
However, the policy has come under heavy criticism from the International Air Transport Association (IATA). Representing the body at the forum, Dr. Samson Fatokun, IATA’s Area Manager for West and Central Africa, accused the Federal Government of breaching multiple international treaties, including the December 2024 ECOWAS Treaty, which explicitly prohibits member states from imposing VAT on air passengers and goods.
Fatokun warned that the policy amounts to multiple taxation on an already overburdened industry and may drive up costs for both local and international airline operators.
He pointed to the existing 5% Ticket Sales Charge and Cargo Sales Charge (TSC/CSC) as evidence of the heavy financial load already placed on airlines, questioning the rationale behind introducing new VAT requirements.
“This is an industry that is already battling high operational costs, multiple levies, and regulatory charges. Adding VAT on aircraft and spare parts is a direct contradiction to global aviation norms and treaty obligations,” Fatokun said.
The federal government had previously granted tax relief to airlines in late 2021, exempting them from paying customs duties and VAT on aircraft imports, spare parts, and air ticketing. That exemption was widely applauded as a progressive move to support the growth of the local aviation sector.
The new Tax Act, however, reverses those concessions and mandates VAT compliance across all aviation-related imports and services.
Despite industry pushback, government representatives maintain that the reforms are designed to create a sustainable tax framework that ensures accountability, improved compliance, and increased fiscal revenue without stifling economic growth.
