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The Nigerian government has said the new tax laws will support Nigeria’s airline industry and reduce operating costs, not damage the sector as some have claimed.
The explanation was given by the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, in a post on his X account on Monday.
Oyedele said the Tax Reforms Committee recognises the real challenges facing airlines, especially the burden of multiple taxes, levies and regulatory charges, adding that the government has been engaging airline operators and will continue discussions with them.
“We recognise the genuine challenges facing Nigeria’s aviation industry, particularly the burden of multiple taxes, levies, and regulatory charges,” Oyedele wrote.
“The Presidential Fiscal Policy and Tax Reforms Committee, on behalf of the government, has engaged extensively with airline operators and those engagements are ongoing.”
He said, contrary to the claim that the new tax laws will hurt the airline industry, that the reform is part of the solution, not the source of the problem.
Oyedele explained that one of the biggest reliefs for airlines is the removal of the 10% withholding tax on aircraft leases.
“The single biggest tax burden on airlines has been the 10 per cent withholding tax on aircraft leases under the existing law. This has now been removed,” he wrote.
He added that it has been replaced with a rate to be determined in a regulation, creating the legal basis for either a full exemption or a significantly lower rate.
“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. Eliminating this burden is a major structural relief for the sector.”
On value-added tax, Oyedele said the new system would allow airlines to recover VAT paid on goods and services.
“Under the new tax laws, airlines become fully VAT-neutral,” he wrote. “Any VAT paid on imported or locally procured assets, consumables, and services will become fully claimable. Where an airline has excess input VAT, the law mandates a refund within 30 days, supported by a fully funded tax refund account and the option to offset VAT credits against other tax liabilities. This directly reduces cost pressure and improves liquidity.”
He also said existing exemptions on commercial aircraft, engines and spare parts remain unchanged, stressing that “there is no reversal or new burden introduced under the tax reforms.”
Addressing fears of higher ticket prices, Oyedele said the impact would be limited. “Even in a worst-case scenario where VAT were not claimable, the maximum impact would still be 7.5 per cent, not the price increases being suggested. That is, a N125,000 ticket becomes not more than N134,375 and a N350,000 ticket not more than N376,250,” he stated.
On corporate taxes, he said the new law provides a framework to reduce corporate income tax from 30 per cent to 25 per cent, while several separate levies have been merged into a single development levy to reduce complexity.
Oyedele added that the problem of multiple charges on airlines was not created by the new tax laws. “The tax harmonisation provisions in the new laws mean the situation can only improve, not worsen, from 2026,” he said.
“Overall, the new tax laws provide a strong legal and policy framework to resolve the long-standing tax challenges in the aviation sector, reduce operating costs for airlines, and ensure minimal impact on passengers,” he added.
“If the current engagement with industry stakeholders is sustained, the remaining non-tax issues will be resolved sooner rather than later. Claims not grounded in fact do not help this process. The new tax laws are not the problem; they are a critical part of the solution.”
The new tax reforms are scheduled to take effect on January 1, 2026.
