The Airline Operators of Nigeria (AON) has said the implementation of tax reforms will sound a death knell for domestic carriers operating in Nigeria.
Vice-President of the AON, Mr. Allen Onyema, declared that domestic airlines would close up in 48 hours after the implementation of the tax law.
President Bola Ahmed Tinubu had recently signed into law four new tax reform bills with implementation starting in January 2026.
The aviation sector has been sounding an alarm about the effect of the new law especially the unification of the revenue stream which might hamper the capacity of agencies to operate effectively without the control of their resources.
However, speaking during a panel discussion at the annual LAAC conference in Lagos, Onyema who is the Chairman/CEO of Air Peace, said Nigerian airlines were already taxed to death.
He noted that in the new tax laws, the duty waiver granted on importation of aircraft and parts has been reinstated.
The tax waiver which was implemented about five years ago had provided a relief for the operators in buying new planes and importing aircraft parts.
Onyema stated that bringing back the duty on aircraft and its spares would worsen the financial straits of airlines which are already taxed to the death.
“And even now, in current tax reforms, I don’t know who put it there, that we have to go back to the regime of paying custom duties for imported aircraft, custom duties for imported spare parts, VAT of 7.5% for imported aircraft, and even ticket fares. The airlines would die within 48 hours.
“Within 48 hours. But I am happy that the Minister of Aviation, Mr. Festus Keyamo, has taken it up because if it is ever implemented from January next year, airlines would die. They would just die. It has never been done anywhere before,” he said.
He stated that the profit margin in airline business is very slim yet the Nigerian carriers are often stigmatised.
“If you invest $100 million in aviation, maybe at the end of the day you are expecting 3% profit or 5% profit. If you take $100 million to agriculture or to importation, you may get up to 70% profit at the end of the day.
“So it is not as if you do not make profit at all, but what is the margin of this profit? Again, taxation. The airline is going to have a tax death. We pay a lot of charges. And I keep on saying it, and I will say it as AON. The 5% we pay for ticket fares to the NCAA is affecting the airlines.
“Because you don’t make 5% gain. And they will tell you, that money does not belong to you. It is the money you’re collecting from passengers, on behalf of us. No. It is already limiting your ability to charge for the tickets. You can collect it directly from the passenger, so that whatever we collect from passengers will belong to us.
“So I am not saying that we should not pay anything to the government, but it has to be cost recovery. Even the ICAO principle is about cost recovery. What we are doing here today, is a matter of legislation. The 5% has been legislated.”(Daily trust)
