Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has insisted that the newly enacted tax laws are designed to strengthen Nigeria’s aviation industry and lower operating costs, dismissing concerns by Air Peace Chairman, Allen Onyema, that the reforms could push airfares beyond ₦1 million.
Oyedele made the clarification on Tuesday via his X account, responding to comments made by Onyema during an ARISE NEWS interview on Sunday, in which the airline executive warned that the tax reforms could cripple domestic carriers and trigger sharp fare increases.
Acknowledging the difficulties facing the sector, Oyedele said the government is aware of the burden imposed by multiple taxes and charges on airlines.
“We recognise the genuine challenges facing Nigeria’s aviation industry, particularly the burden of multiple taxes, levies, and regulatory charges,” he said.
He added that the Presidential Fiscal Policy and Tax Reforms Committee has been engaging airline operators, noting that consultations with industry stakeholders are ongoing.
Rejecting claims that the new tax regime would worsen the industry’s challenges, Oyedele stressed that the reforms are intended to address long-standing cost pressures. According to him, “the reform is part of the solution, not the source of the problem.”
On aircraft leasing, which he described as the biggest tax burden on airlines, Oyedele disclosed that the 10 per cent withholding tax (WHT) on aircraft leases has been removed.
“This has now been removed and replaced with a rate to be determined in a regulation, creating the legal basis for either a full exemption or a significantly lower rate,” he said.
He explained the impact of the change, adding, “To put this in context, on a $50 million aircraft lease, an airline currently pays $5 million in WHT, which is non recoverable and therefore directly increases operating costs and strains cash flow.”
Addressing Value Added Tax (VAT), Oyedele said the post-COVID VAT suspension created inefficiencies and hidden costs for airlines. Under the new tax framework, he explained, airlines would now be VAT-neutral.
“Under the new tax laws, airlines become fully VAT-neutral,” he said, noting that VAT paid on assets, consumables and services would be fully claimable, with refunds mandated within 30 days where excess input VAT exists.
Oyedele also clarified that import duty exemptions on commercial aircraft, engines and spare parts remain intact.
“There is no reversal or new burden introduced under the tax reforms,” he stated.
On ticket pricing, Oyedele said fears of extreme fare increases were overstated, arguing that the aviation business is a low-margin industry and that a 7.5 per cent VAT on tickets would have a modest impact.
“That is, a N125,000 ticket becomes not more than N134,375 and a N350,000 ticket not more than N376,250,” he said.
He further highlighted corporate income tax reforms, explaining that the new laws provide a framework to reduce the corporate income tax rate from 30 per cent to 25 per cent. In addition, several profit-based levies, including the Tertiary Education Tax, NASENI, NITDA and Police levies, have been consolidated into a single Development Levy to reduce complexity and enhance certainty for businesses.
On the issue of multiple levies and charges imposed on airlines and tickets, Oyedele noted that these were not introduced by the new tax laws. He said the government is working with airline operators and relevant agencies to address the problem, adding that tax harmonisation provisions mean the situation “can only improve, not worsen, from 2026.”
Oyedele’s comments followed Onyema’s warning that the reforms could push domestic airfares beyond ₦1 million and destabilise the aviation industry. Speaking on ARISE NEWS, Onyema said, “The Nigerian airlines are heavily overburdened by taxes, levies, and all manner of charges. Just take a ticket of about 350,000. What comes to the airlines is about 81,000 Naira.”
Onyema argued that renewed VAT on aircraft, spare parts and ticket sales, coupled with high borrowing costs, would make airline operations unsustainable.
“If we implement that tax reform, Nigerian airlines will go down in three months,” he warned, adding that economy class fares could rise sharply if the policy is not reviewed.
However, Oyedele maintained that the reforms provide a strong legal and policy framework to lower airline operating costs and protect passengers, insisting that “The new tax laws are not the problem, they are a critical part of the solution.”
