Nigeria: Govt Yet to Remove 5% VAT in Air Transport
About nine months into the Federal Government's suspension of
mandatory five per cent Value Added Tax (VAT) in air transport,
airlines are yet to see the implementation.Airlines operators Monday,
said their unrelenting pressure on relevant ministries notwithstanding,
"nothing has changed" as government continued to collect VAT on air
fares issued in the country.
Recall that the Federal Government, in an Executive Order issued in
June 2018, had suspended the collection of VAT in all forms of
transportation, in compliance with international standard.The Guardian
reported last August that the Federal Inland Revenue Service (FIRS),
which collects taxes on behalf of the government, claims to be
unaware of such directive as at August.
The Managing Director of Med-View Airlines, Muneer Bankole, said the
matter was still in the negative till date."Nothing is being done in that
direction as at now. All we are praying for is to have the relevant
authorities do the right thing. The government would still need to talk
to the Ministries of Finance, Budget, and other relevant bodies,
including the National Assembly, to have it become a law and binding
on all," Bankole said.
Findings show that all efforts by the Airlines Operators of Nigeria
(AON), including the special presidential committee set up by the Vice
President, Yemi Osibajo, to reconcile multiple charges in the sub-
sector, had failed to speed up the implementation processes. Fact is
that local airlines' operators, unlike their counterparts worldwide, are
charged about 37 sundry charges, among which are a five per cent
Value Added Tax, and another five per cent Passengers Service
As at the last check, Nigeria is the only country that still charges VAT
on air transport. The VAT plus 36 other charges, according to the
airlines, account for at least 40 per cent of total revenue, leaving the
airlines heavily indebted, in financial distress, or both in most cases.
Bankole said: "Definitely, you know that commercial operation like
airline has international connection; you don't pay VAT anywhere in the
world. So, let us do the right things here. All these charges - VAT and
taxes don't apply to aviation because they don't help the airlines'
business. That is why our airlines are nose-diving and government
agencies just sit down looking.
"They (regulatory agencies) should get out of this colonial approach.
Every government agencies should go out, fend to get money and work
as real service provider. That is the way to go. When you say you are
committed to paying five per cent to this, four per cent to that, three
per cent to another and so on, then you are still in the colonial era,"
The AON observed that the airlines yearly remit VAT in excess of N10
billion.Chairman of AON, Capt. Nogie Meggison, had said that the then
removal of VAT was in response to perennial plight of the airlines, and
dwindling fortunes of the sector.
"We have been crying out for decades now for discussions on the
immediate removal of VAT from domestic air transportation in line with
global best practice, but we have barely been heard over the
years."VAT is an added burden on our passengers who have limited
disposal funds, and have reached their elastic point in this difficult
time in the nation's economy.