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BY ANTHONY OMOH
Aviation stakeholders have raised alarm over the New Tax Act 2025, describing it as inconsistent with international treaties, counterproductive to Nigeria’s aviation growth and retrogressive for the struggling industry.
The concerns were aired during the Aviation Sector Enlightenment Initiative Business Webinar, where the Nigeria Revenue Services (NRS) admitted that passenger traffic may dip but defended the government’s position. The Webinar was hosted by Aviation and Allied Business Publication.
Dr. Samson Fatokun, Regional Manager of the International Air Transport Association (IATA), said the new taxation regime is contradictory to binding commitments already signed by Nigeria.
He stressed that the December 14, 2024, ECOWAS Supplementary Act signed by President Bola Tinubu in his capacity as Chairman of ECOWAS exempts air passenger and cargo transport from taxation effective January 1, 2026.
“Our president cannot sign a regional act, and our internal legislation counters it. We don’t know what we are doing as a nation,” Fatokun warned.
“The Supplementary Act of ECOWAS is binding. Nigeria is also a member of ICAO and subject to regulations on aviation taxation. We need to adjust our laws to avoid contradictions with treaties we have already signed.”
Fatokun explained that aviation is a global business governed by treaties on taxation, finance, and economics. He argued that airlines already face numerous levies in the form of charges, taxes, and fees.
According to him, piling the New Tax Act risks further weakening an industry that operates in a highly competitive international environment.
In his contribution, Professor Mustapha, Nigeria’s first aviation lawyer, warned that the New Tax Act contradicts existing legal provisions and could result in double taxation. He pointed to sections 22 and 23 of the Civil Aviation Act 2022.
“By virtue of sections 22 and 23 of the Civil Aviation Act 2022, no taxation can be deducted from the income of the aviation sector. The FIRS position contradicts this provision,” he explained.
“If applied, it would amount to double taxation. The Federal Inland Revenue has to reconsider because these provisions conflict with one another. This needs urgent legal clarification.”
Adding a private-sector view on the New Tax Act, Pathfinder’s Nkechi Onyenso expressed concern about passenger affordability, warning that VAT could worsen already low traffic numbers.
“Sometimes, I’m not speaking for the airlines, but because I do work with some of them, I do see that they have very low passengers as it is now. I’m just wondering the impact of the introduction of VAT on airline tickets, how much further it will impact passenger flow,” Onyenso said.
She noted that airlines already face unavoidable operating costs but rely solely on passenger revenues to remain afloat.
“Airlines already have standard costs they must pay, but revenue comes only from passengers. If VAT is added, it will impact fares and potentially reduce traffic further. Transparency and efficiency are key for good governance, but more stakeholder engagement is needed to understand the grassroots of the aviation industry and how this new tax administration can positively affect operations.”
Assistant Director, Tax Policy and Advisory, Nigeria Revenue Services Mrs. Nkechi Umegakwe responded, insisting the law is part of wider reforms to align Nigeria with global best practices. She admitted that the New Tax Act might raise costs but argued that VAT was not unique to aviation and is borne by consumers, not suppliers.
“VAT is a consumption tax. Even the government pays VAT. Airlines are merely agents of collection,” she explained.
“Yes, ticket costs may rise and passenger traffic may dip, but VAT does not amount to double taxation. It applies whenever a good or service is consumed whether it is shoes, cars, or banking services.”
Umegakwe also reminded participants that VAT on aircraft, parts, and commercial tickets was initially exempted under the 2020 Finance Act as part of post-COVID economic support measures. Those exemptions have now been reversed.
She reassured stakeholders that their concerns were being noted:
“I will take all this feedback back. This engagement has given us new insights, and FIRS is all about feedback,” she stressed, adding that consultation would continue.
The divide between government and stakeholders reflects deeper issues in Nigeria’s aviation sector. Airlines continue to struggle with high operating costs, foreign exchange pressures, and declining passenger traffic. Industry voices insist that the New Tax Act risks worsening these challenges by pushing ticket prices higher and discouraging air travel.
Meanwhile, government Tax agencies argue that reforms are necessary to expand the tax base and bring Nigeria into alignment with international standards. Balancing revenue generation with sector sustainability remains the crux of the debate of this New Tax Act.
As the aviation industry braces for the implementation of the New Tax Act 2025, stakeholders are calling for urgent dialogue to avoid policies that could further damage an already fragile sector.
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