December 29, (THEWILL) — The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has stated that Nigeria’s new tax laws are specifically designed to strengthen the aviation industry and ease the upward pressure on airfares.
Oyedele’s clarification comes in response to concerns raised by domestic operators. Allen Onyema, Chairman and CEO of Air Peace, recently warned that the reforms could drive domestic airfares to ₦1 million or more.
Onyema expressed particular concern over the potential reintroduction of Value Added Tax (VAT) on imported aircraft and spare parts—items previously exempted under the 2020 Finance Act.
Speaking on Monday, December 29, 2025, Oyedele addressed these fears, noting that the Federal Government is working to resolve the burden of multiple levies and regulatory charges.
He highlighted several structural reliefs contained in the new framework:
Oyedele identified the removal of the 10% withholding tax on aircraft leases as the single biggest relief for the sector.
Under the previous regime, this tax was non-recoverable, costing airlines millions of dollars and straining cash flow. The new law provides a legal basis for either a full exemption or a significantly reduced rate.
He clarified that the new laws restore full VAT neutrality. While temporary VAT suspensions during the pandemic seemed beneficial, they prevented airlines from reclaiming “input VAT” on assets and overheads, effectively embedding those costs into ticket prices.
Under the new framework, airlines can fully recover VAT paid on imported and locally procured goods. The law now mandates VAT refunds within 30 days or allows airlines to offset credits against other tax liabilities.
Oyedele reassured operators that existing exemptions on commercial aircraft, engines, and spare parts remain unchanged.
Furthermore, the new laws provide a framework to reduce Corporate Income Tax from 30% to 25% while harmonising various profit-based levies into a single “Development Levy” to reduce complexity.
Addressing the ₦1 million fare prediction, Oyedele described such fears as exaggerated. He explained that since input VAT is now fully recoverable, the net effect on tickets would be limited.
He noted that even in a worst-case scenario, ticket price increases would not exceed the 7.5% VAT rate.
THEWILL reports that while the tax reforms are set for implementation in 2026, the Federal Government is continuing engagements with aviation agencies to address the separate issue of multiple administrative levies that currently drive up operating costs.
Oyedele urged stakeholders to rely on the facts of the legislation rather than speculation, asserting that the reforms provide a foundation to lower costs and ensure industry sustainability.
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