Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has insisted that the new tax laws will support Nigeria’s aviation industry and reduce costs, assuaging warnings by Air Peace Chairman Allen Onyema that airfares could rise beyond ₦1 million.
Oyedele made the clarification on Tuesday via his X account, responding to concerns raised by Onyema during an ARISE NEWS interview on Sunday, where the Air Peace boss warned that the tax reforms could force airlines out of business and trigger massive fare increases.
In his post, Oyedele acknowledged the challenges facing the aviation sector, saying, “We recognise the genuine challenges facing Nigeria’s aviation industry, particularly the burden of multiple taxes, levies, and regulatory charges.”
He added that the Presidential Fiscal Policy and Tax Reforms Committee has been engaging airline operators and that discussions are ongoing.
Contrary to fears expressed by airline operators, Oyedele said the reforms are not responsible for the sector’s problems, stressing that “the reform is part of the solution, not the source of the problem.”
He explained that several long standing tax issues driving up airline costs have either been resolved under the new laws or are being structurally addressed.
On aircraft leasing, Oyedele said the biggest tax burden on airlines, the 10 per cent withholding tax on aircraft leases, has been removed. He stated, “This has now been removed and replaced with a rate to be determined in a regulation, creating the legal basis for either a full exemption or a significantly lower rate.”
He added, “To put this in context, on a $50 million aircraft lease, an airline currently pays $5 million in WHT, which is non recoverable and therefore directly increases operating costs and strains cash flow.”
Addressing Value Added Tax, Oyedele said the temporary VAT suspension introduced after COVID-19 created hidden costs for airlines. According to him, “Under the new tax laws, airlines become fully VAT-neutral,” as VAT paid on assets, consumables and services will now be fully claimable, with refunds mandated within 30 days where excess input VAT exists.
He also clarified that import duty exemptions on commercial aircraft, engines and spare parts remain unchanged, noting that “There is no reversal or new burden introduced under the tax reforms.”
On ticket prices, Oyedele said fears of extreme fare hikes were exaggerated, explaining that airline operations are low margin and that a 7.5 per cent VAT on tickets would have a limited impact. He said, “That is, a N125,000 ticket becomes not more than N134,375 and a N350,000 ticket not more than N376,250.”
The committee chairman also highlighted corporate income tax reforms, noting that the new law provides a framework to reduce corporate income tax from 30 per cent to 25 per cent. He added that several profit-based levies, including Tertiary Education Tax, NASENI, NITDA and Police levies, have been harmonised into a single Development Levy to reduce complexity and improve certainty.
Oyedele further addressed the issue of multiple levies and charges imposed on airlines and tickets, saying these were not introduced by the new tax laws. He stated that government is working with operators and relevant agencies to resolve the issue, adding that tax harmonisation provisions mean the situation “can only improve, not worsen, from 2026.”
His comments came after Onyema warned that the tax reforms could push domestic airfares beyond ₦1 million and cripple the aviation industry. Speaking on ARISE NEWS, Onyema said, “The Nigerian airlines are heavily overburdened by taxes, levies, and all manner of charges. Just take a ticket of about 350,000. What comes to the airlines is about 81,000 Naira.”
Onyema argued that renewed VAT on aircraft, spare parts and ticket fares, combined with high borrowing costs, would make airline operations unsustainable. He warned, “If we implement that tax reform, Nigerian airlines will go down in three months,” adding that economy class tickets could rise sharply if the policy is not reversed.
Howevervin his post, Oyedele maintained that the reforms provide a strong legal and policy framework to reduce airline operating costs and protect passengers, stating that “The new tax laws are not the problem, they are a critical part of the solution.”
Ademide Adebayo
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