New Tax Laws Will Support, Not Harm Airlines — Oyedele Explains Aviation Reforms

Fresh clarifications have emerged on Nigeria’s new tax laws amid growing concerns from stakeholders in the aviation sector, following a detailed intervention by Taiwo Oyedele on his official Facebook page.

PulseNets learnt that the position, issued on behalf of the Presidential Fiscal Policy and Tax Reforms Committee, directly addresses claims that the new tax framework would negatively impact airlines operating in Nigeria. According to the committee, the reforms are designed to ease — not worsen — the long-standing financial pressures confronting the aviation industry.

Oyedele acknowledged that airlines face real structural challenges, particularly the heavy burden of multiple taxes, levies, and regulatory charges. He noted that the federal government, through the committee, has engaged extensively with airline operators, with consultations still ongoing.

“Contrary to the narrative being pushed in some quarters, the new tax laws are part of the solution to the aviation sector’s problems, not the cause,” Oyedele stated, as obtained by PulseNets.

Removal of Withholding Tax on Aircraft Leases

PulseNets reported that one of the most significant reliefs under the new tax laws is the removal of the 10 percent withholding tax (WHT) on aircraft leases, previously regarded as the single biggest tax burden on airlines.

Under the old system, airlines leasing aircraft were required to pay a non-recoverable 10 percent WHT, which significantly inflated operating costs. Oyedele explained that this provision has now been eliminated and replaced with a rate to be determined by regulation, creating room for either a full exemption or a substantially reduced rate.

“On a $50 million aircraft lease, an airline was previously forced to pay $5 million in withholding tax, money that could not be recovered and directly strained cash flow,” he said. “Removing this burden provides major structural relief for airlines.”

VAT: Ending Embedded Costs, Restoring Neutrality

PulseNets learnt that while the temporary VAT suspension introduced after COVID-19 appeared beneficial, it came with hidden costs. Airlines were unable to recover input VAT on non-exempt items such as assets, consumables, and overheads, effectively embedding VAT into their cost structures.

Under the new tax laws, airlines will now operate under full VAT neutrality. Oyedele explained that VAT paid on imported or locally sourced assets, consumables, and services will be fully claimable.

“Where excess input VAT exists, the law mandates a refund within 30 days, backed by a dedicated and fully funded tax refund account,” he disclosed. “Airlines may also offset VAT credits against other tax liabilities, improving liquidity and easing cost pressures.”

Import Duties Remain Unchanged

Addressing concerns about import-related costs, PulseNets obtained confirmation that existing exemptions on commercial aircraft, engines, and spare parts remain fully intact. According to Oyedele, the tax reforms do not introduce any new import duties or reverse existing exemptions.

Ticket Prices and VAT Impact

On the sensitive issue of ticket pricing, PulseNets learnt that airline operations remain low-margin by nature. Oyedele explained that a 7.5 percent VAT on tickets, within a system that allows full recovery of input VAT, results in a much lower net impact than many critics suggest.

“Even in a worst-case scenario where VAT is not claimable, the maximum increase remains 7.5 percent,” he said. “A N125,000 ticket would rise to no more than N134,375, while a N350,000 ticket would not exceed N376,250.”

Corporate Income Tax and Levy Harmonisation

PulseNets reported that the new tax laws also introduce a framework for reducing corporate income tax (CIT) from 30 percent to 25 percent, a move expected to benefit airlines directly.

In addition, multiple profit-based levies — including Tertiary Education Tax, NASENI, NITDA, and Police levies — have been harmonised into a single Development Levy. Oyedele noted that this step reduces complexity, improves predictability, and ensures greater certainty for businesses in the aviation sector.

Multiple Levies and Regulatory Charges

While acknowledging the reality of multiple levies imposed on airlines and tickets, Oyedele clarified that these charges were not introduced by the new tax laws. PulseNets learnt that the federal government is actively working with operators and relevant agencies to achieve a lasting resolution.

“It is incorrect to blame the tax reforms for these levies,” he said. “Importantly, the harmonisation provisions in the new laws mean the situation can only improve — not worsen — from 2026.”

In conclusion, PulseNets obtained that the Presidential Fiscal Policy and Tax Reforms Committee believes the new tax laws establish a solid legal and policy framework to address long-standing tax bottlenecks in Nigeria’s aviation sector.

Also Read: New Tax Laws: Full Impact of Reforms to Become Clear from January 1, 2026 — FIRS

Oyedele stressed that the reforms are aimed at reducing airline operating costs while ensuring minimal impact on passengers.

“If engagement with industry stakeholders continues, the remaining non-tax challenges will be resolved sooner rather than later,” he said. “Unfounded claims do not advance the process. The new tax laws are not the problem; they are a critical part of the solution.”