By Aminat Bakare
Nigeria is bracing itself for a significant change in taxation as the Federal government of Nigeria’s new tax laws are billed for implementation from January 1, 2026. The new tax regime will have impact on corporate taxation, personal income tax, VAT amongst other significant effects for companies and individuals.
In other to create awareness for the aviation sector, one of the sectors to be affected by the changes, Africa’s leading magazine on air transport development, Aviation & Allied Business Publications partnered with the Nigeria Revenue Service (NRS) formerly Federal Inland Revenue Service (FIRS) to host a webinar with the theme: Nigeria Tax Act (2025) & The Aviation Industry: Aviation Sector Enlightenment Initiative.
The webinar had in attendance the Honourable Minister of Aviation and Aerospace, Barrister Festus Keyamo represented by Alhaji Mohammed Ahmed Tijani, Director, Air Transport Management, Ministry of Aviation and Aerospace, Assistant Director, NRS, Mrs. Nkechi Umegakwe, Assistant Director, Tax Policy and Advisory, Nigeria Revenue Service (NRS), Captain Edward Boyo, Publisher, Aviation & Allied Business Publications, Dr. Richard Aisuebeogun, a former Managing Director, Federal Airports Authority of Nigeria (FAAN), Dr. Samson Fatokun, Regional Manager, West and Central Africa, International Air Transport Association (IATA), Captain Samuel Caulcrick, Former Rector, Nigerian College of Aviation Technology (NCAT), Mrs. Nkechi Onyenso, Managing Director, Pathfinders International and Chairperson, Aviation Sectoral Group, Institute of Chartered Secretaries of Nigeria, amongst many others.
The representative of the Honourable Minister stated that “discussions are underway between the Ministry and the Tax Reform Committee, and the Minister is pushing for necessary adjustments with certain aspects of the reform as it affects the aviation sector.”
Major Concerns of the Industry
NRS resource person, Mrs. Nkechi Umegakwe in her presentations said the reform was created with “businesses, the wider economy and the employees in mind.” She said “the new tax act is a tool to strengthen the economy and expand enough disposable income for citizens to be able to access luxuries like air travel amongst others.”
According to Mrs. Umegakwe, with the new tax laws, signed into law in June 2025 and expected to take effect January 2026, aviation assets that are peculiar to the aviation industry such as commercial aircraft, engines, spare parts and airline transportation are no longer exempted from Value Added Tax (VAT) charged by NRS, though overpaid taxes can be refunded within 30 days.
She noted that VAT is now enshrined in the Nigerian Tax Act, with the VAT (Modification) Order 2024 remaining in force. She said: “Nigerian companies engaged in airline transportation business and other allied companies in aviation sector are charged to tax like every other Nigerian company.”
According to her, the new tax reforms were “geared towards increased revenue generation for the Federal Government, business cost reduction via VAT recovery, improved cash flow for businesses, and stronger compliance via digital invoicing and tracking, among others.”
Umegakwe noted that under the new tax reforms, various taxes are now harmonised to create a unified system in order to eliminate inconsistencies and drive efficiency, while it also simplified the current tax laws.
Whereas the intentions of the Government appear noble, the provisions of the new tax act as it relates to the aviation sector have raised a lot of concerns among the stakeholders. Dr. Samson Fatokun of IATA noted the different levies that are already imposed on the aviation industry and how the additional tax would impact the industry. He explained that some provisions of the new tax laws are contradictory to the commitments that has been previously signed by President Bola Ahmed Tinubu as Chairman of ECOWAS which exempts air passenger and cargo transport from taxation effect and called for an adjustment to avoid such contradictions. He particularly noted that internationally there is no Value Added Tax (VAT) on air ticket across the world and noted that the situation of charging VAT on air tickets in Nigeria will be a misnomer.
Buttressing Dr. Fatokun’s points, Professor Mustapha, Nigeria’s Professor of Aviation Law said: “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. If applied, it would amount to double taxation.”
From a private sector perspective, Mrs. Onyenso pointed out the fact that even though the new taxation policy has its own benefits, the move will most likely push up ticket prices and further contribute to the low passenger traffic and rising cost. She canvassed for further engagement by the Federal Government and aviation business stakeholders.
Also, Capt. Samuel Caulcrik, highlighted the fact that the various taxes and levies in the sector were already choking the operators and slowing down the growth of the business in the sector and stated that all the money being spent on the sector comes from air passengers and shippers, noting that any additional tax would kill the industry.
Capt. Boyo noted that “aviation should not be grouped generally with other sectors as the sector is uniquely vulnerable, this is because most of its operations ranging from aircraft acquisitions, maintenance and a host of others depend heavily on foreign exchange.” He emphasized that piling additional tax burden could stifle the aviation sector.” While noting that the new tax laws have a lot of benefits, Capt. Boyo called on the President to bring the aviation industry in Nigeria as a priority sector as the country’s economy cannot grow without the aviation industry. He said: “we call on the government to review the numerous charges and levies that affect airlines in the country, if not we may see an increase in air fares because high cost of operation could lead to rising ticket prices.”
Mrs. Umegakwe reassured the participants that all their contributions had been noted and would be taken up for review and reconsideration but assured the stakeholders that with the implementation, the benefits would become clearer.
Even with the reassurances, the industry remains apprehensive especially as some of the exemptions including VAT on tickets, import duty waivers and modifications to the Export Free Zone provisions are set to take effect.