The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has provided crucial clarification regarding the impact of Nigeria's upcoming tax legislation on the aviation sector. He asserts that the new laws, effective from January 1, 2026, are designed to assist airlines, not to impose additional hardship.
Clarification on Aviation Sector Relief
Oyedele issued this clarification on Monday, December 29, 2025, via a post on his personal X account. He explained that the Federal Government acknowledges the significant challenges facing Nigeria's aviation industry, particularly the burden of multiple taxes and regulatory charges. The committee has engaged extensively with airline operators, and these discussions are ongoing.
"Contrary to the claim that the new tax laws will hurt the industry, the reform is part of the solution, not the source of the problem," Oyedele stated emphatically.
Key Tax Reforms Benefiting Airlines
Oyedele outlined several specific long-standing tax issues that have been resolved or are being addressed structurally in the new legislation:
1. Removal of Withholding Tax on Aircraft Leases: The single biggest tax burden, a 10% withholding tax (WHT) on aircraft leases, has been eliminated. It is replaced with a rate to be set by regulation, paving the way for a full exemption or a much lower rate. For context, on a $50 million aircraft lease, an airline currently pays a non-recoverable $5 million in WHT, directly inflating operating costs and straining cash flow.
2. VAT Neutrality for Airlines: The new laws make airlines fully VAT-neutral. Any Value Added Tax paid on imported or locally procured assets, consumables, and services becomes fully claimable. Where an airline has excess input VAT, the law mandates a refund within 30 days. This change directly reduces cost pressure and improves liquidity.
3. Preservation of Existing Exemptions: All current exemptions on commercial aircraft, engines, and spare parts remain fully intact. No new burdens or reversals are introduced by the tax reforms.
4. Real Impact of Ticket VAT: Oyedele clarified that with a fully recoverable input VAT system, the net impact of the 7.5% VAT on tickets is significantly lower than the headline rate. Even in a worst-case scenario, the maximum impact would be 7.5%, not the higher increases being suggested. This means a N125,000 ticket would cost no more than N134,375.
5. Reduction in Corporate Income Tax: The new framework provides for reducing the Corporate Income Tax rate from 30% to 25%, which will benefit airlines. Furthermore, several profit-based levies have been harmonized into a single Development Levy, reducing complexity.
Addressing Non-Tax Levies and The Path Forward
Oyedele acknowledged the real problem of multiple levies on airlines and tickets but stressed that these charges are not created by the new tax laws. It is therefore incorrect to attribute them to this reform. The government is actively working with operators and agencies to find a lasting solution. Critically, the tax harmonisation provisions mean the situation can only improve from 2026.
In conclusion, Oyedele stated that overall, the new tax laws provide a strong legal framework to resolve long-standing tax challenges, reduce operating costs for airlines, and ensure minimal impact on passengers. He expressed confidence that with sustained engagement, remaining non-tax issues will be resolved promptly.
"Claims not grounded in fact do not help this process," he added, "simply because the new tax laws are not the problem, they are a critical part of the solution."
