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FG defaults on VAT waiver for domestic airlines

More than one year after the pronouncement for Value Added Tax to be removed from air transport, the Federal Government has failed to implement the order.

Findings by our correspondent showed that domestic airlines still pay VAT, charged as five per cent on every flight ticket sold and remitted to the Federal Government.

The Media and Communications Manager, Dana Air, Mr Kingsley Ezenwa, said nothing had been said after the pronouncement made by President Muhammadu Buhari last year.
President Buhari recently stated that the decision to remove VAT from domestic air transport was in line with global best practices and would make air travel more affordable and subsequently lead to the creation of jobs by the air transport service value chain as well as increase revenue for the government.

But airline sources said they had only heard about the order but had yet to see it implemented.

The Chairman and Chief Executive Officer, Air Peace, Mr Allen Onyema, said there had been the implementation of zero duty on spare parts but not on VAT. We have been having back and forth with the Federal Inland Revenue Service. The Federal Government has pronounced it but the FIRS insists there is no gazzete. But they are implementing the zero duty on parts,” he said.

According to him, aviation is a tough business and domestic carriers need support from the government.

The Airline Operators of Nigeria, the umbrella body for airlines in the country, had estimated that its members were paying over N10bn as taxes annually.

The Chairman of AON, Capt. Nogie Meggison, had recently stated that the situation was threatening airline operations.

Shortly before the Executive Order, the AON had threatened that its members would no longer pay VAT with effect from June 14, 2018, saying that VAT remittance was unfair, as only domestic airlines were made to pay, while foreign airlines were exempted.

The AON had lamented that air travel was also the only mode of transportation that was subjected to the payment of VAT, which had resulted in airlines not being able to optimally utilise their aircraft assets. The FIRS had been mute on the development, describing the order as a policy issue.

The Director of Air Transport Regulations, Nigerian Civil Aviation Authority and member of the Presidential Committee on Airlines’ Taxes and Charges, Group Capt. Edem Oyo-Ita (retd.), said no reason had been given for the delay.

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