Federal Government has declared that there is no going back on the full implementation of the new Tax Reforms Act, which is slated to commence operations from January 1, 2026.

This is as the International Air Transport Association (IATA) has faulted the Federal Government for contravening the numerous international treaties it signed with other countries and organisations, including the December 2024 Treaty of the Economic of West African Countries (ECOWAS), which prohibits member nations from paying taxes on air passengers and goods.

Participants yesterday at a Business Webinar jointly organised by the Aviation & Allied Business in collaboration with the Federal Inland Revenue Services (FIRS) with the theme: ‘Nigeria Tax Act (2025) & The Aviation Industry: Aviation Sector Enlightenment Initiative,’ described the new tax reforms as multiple taxation on the aviation sector, especially the airline operators.

The Assistant Director, Nigeria Revenue Service (formerly FIRS), Mrs Nkechi Umegakwe, in her presentation, said the government followed due diligence before coming up with the new tax laws.

Umegakwe, who was the lead presenter at the event, insisted that it was mandatory for airline operators, including other allied businesses in the aviation sector, to now pay the Value Added Tax (VAT) on all of their services and operations.

Currently, airlines are exempted from the payment of import duties and VAT on importation of commercial aircraft, commercial aircraft engines, spare parts and air tickets. She insisted that all the above are now liable to VAT from January 1, 2026.

According to her, the new tax reforms were geared towards increased revenue generation for the Federal Government, business cost reduction via VAT recovery, improved cash flow for businesses, and stronger compliance via digital invoicing and tracking, among others.

Umegakwe said that under the new tax reforms, various taxes had been harmonised to create a unified system in to eliminate inconsistencies and drive efficiency, while it also simplified the current tax laws.

But the Area Manager, West and Central Africa, IATA, Dr Samson Fatokun, in his contribution as a member of a panel, criticised the government for inconsistencies.

Fatokun, in his presentation, said the airlines and other operators in the sector were already overburdened with numerous levies and charges, wondering why the government was bent on adding to the current challenges in the sector.

Fatokun mentioned the payment of five per cent Ticket Sales Charge/Cargo Sales Charge (TSC/CSC) by the airlines as one of the levies the airlines were currently battling with. He maintained that the five per cent TSC/CSC inflated the price of air tickets and scared away some potential air passengers from the sector.

He recalled that President Bola Tinubu, in December 2024, as the Chairman of ECOWAS, signed a treaty with other member nations, which prohibited taxes on air passengers and cargo.

The new treaty will take effect from January 1, 2026. Also, an aviation expert, Capt. Samuel Caulcrick, said the various taxes and levies in the sector were already choking the operators and slowing down the growth of business in the sector.

He argued that payment of 7.5 per cent VAT and TSC/CSC by the airlines would amount to multiple taxation on the industry and called on the government to rescind its decision.

Caulcrick further posited that all the money being spent on the sector came from air passengers and shippers, noting that any additional tax would kill the industry.

Also, the Managing Director of Pathfinder Securities, Mrs Nkechi Onyenso, canvassed further engagements by the Federal Government and aviation business stakeholders.

According to her, the paucity of foreign exchange, multiple taxation, and other levies had negative impacts on the aviation industry generally. (The Guardian)

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