The Federal Government has reiterated that the newly enacted tax reforms are aimed at easing operational pressures on airlines and not worsening the challenges facing Nigeria’s aviation sector.
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, made the clarification via a statement issued on Monday, December 29, 2025.
This comes after the Chairman and Chief Executive Officer of Air Peace, Allen Onyema, said Nigeria’s domestic aviation industry could face a serious crisis if newly introduced tax laws are implemented from January 1, 2026, without a review.
Oyedele, who said the government recognises the difficulties confronting airline operators, especially the impact of multiple taxes, levies and regulatory charges, noted that sustained engagements are ongoing between the government and industry stakeholders to address these concerns.
Oyedele countered claims that the new tax regime would hurt airlines, describing such assertions as inaccurate.
According to him, the reforms tackle several long-standing tax issues that have driven up costs in the sector.
He explained that the 10 per cent withholding tax on aircraft leases, which had been a major financial burden on airlines, has been removed under the new law.
He noted that the tax will now be replaced with a rate to be determined by regulation, allowing for either a complete exemption or a significantly reduced charge.
He said this change alone would offer substantial relief to airline operators.
On Value Added Tax, Oyedele said the reforms restore full VAT neutrality to airlines.
Airfares may hit ₦1m as new tax laws take effect — Onyema
He explained that unlike the previous VAT suspension, which prevented airlines from reclaiming input VAT on many expenses, the new system allows full recovery of VAT paid on assets, consumables and services.
Excess VAT credits, he added, would be refunded within 30 days or applied to offset other tax liabilities.
He further clarified that import duty exemptions on aircraft, engines and spare parts remain unchanged, dismissing fears of new customs-related costs under the reforms.
Addressing ticket pricing concerns, Oyedele said the introduction of VAT on tickets would have a limited impact, as airlines would be able to recover input VAT.
He stressed that even in the worst-case scenario, ticket prices would not rise beyond the VAT rate itself.
“Even in a worst-case scenario where VAT were not claimable, the maximum impact would still be 7.5 percent, not the price increases being suggested. That is, a N125,000 ticket becomes not more than N134,375 and a N350,000 ticket not more than N376,250,” Oyedele stated.
On corporate taxation, Oyedele noted that the reforms provide a pathway to reduce corporate income tax from 30 per cent to 25 per cent.
“The new law provides a framework to reduce corporate income tax from 30 percent to 25 percent which will benefit airlines. In addition, several earmarked profit-based levies including Tertiary Education Tax, NASENI, NITDA, and Police levies have been harmonised into a single Development levy, reducing complexity and ensuring certainty,” the committee chairman added.
Oyedele acknowledged the problem of multiple charges imposed on airlines but maintained that these were not created by the new tax laws.
He said the government is working towards a lasting solution, adding that tax harmonisation measures under the reforms would lead to improved conditions from 2026.
He stressed that the new tax laws form a critical part of efforts to resolve tax-related challenges in the aviation sector, lower operating costs for airlines and protect passengers from excessive fare increases.
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