It Will Strengthen Airlines — Oyedele Refutes Onyema’s Claims on New Aviation Tax Policies

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has pushed back against claims made by the Chairman and Chief Executive Officer of Air Peace, Allen Onyema, regarding the impact of Nigeria’s newly introduced tax reforms on the aviation sector. Oyedele maintained that the revised tax framework is structured to ease operational pressure on airlines rather than damage the industry.

Oyedele explained that the reforms are aimed at correcting deep-rooted fiscal problems that have affected airline operators for years. According to him, the new tax laws should not be linked to increasing airfare costs or projected shutdowns within the aviation space.

This response followed Onyema’s comments during an interview on Arise Television on Sunday, where he warned that domestic airline operators might be forced out of business within a few months if the tax reforms, expected to commence on January 1, 2026, are implemented without further adjustments.

During the interview, Onyema blamed high ticket prices on numerous taxes and statutory charges imposed on airlines. He specifically raised concerns about a 7.5 percent Value Added Tax (VAT) on airline tickets, suggesting that such charges could push economy-class fares to as much as ₦1.7 million, thereby limiting access to air travel for many Nigerians.

Reacting to these assertions, Oyedele released a statement on X (formerly Twitter) on Monday, acknowledging the operational and financial struggles currently facing Nigeria’s aviation industry. However, he clarified that the federal government, through the Presidential Fiscal Policy and Tax Reforms Committee, has been in continuous discussions with airline operators to reduce cost pressures and introduce long-term relief measures.

One of the most significant changes highlighted by Oyedele is the removal of the 10 percent withholding tax previously applied to aircraft leasing arrangements. He noted that this tax had been a major contributor to high operating expenses for airlines, particularly because it was non-recoverable under the old tax system.

Under the new tax structure, the withholding tax on aircraft leases has been replaced with a rate that will be determined through regulation. This adjustment allows for the possibility of a full exemption or, at the very least, a substantial reduction, thereby lowering operational costs for airline operators.

Oyedele further explained that the reforms will ensure full VAT neutrality for airlines. This means that airlines will be able to reclaim VAT paid on imported aircraft, locally sourced equipment, aviation fuel, consumables, and essential services. Such a system, he said, would prevent VAT from becoming a hidden cost within airline operations.

Additionally, he disclosed that any excess input VAT incurred by airline operators would either be refunded within 30 days or credited against other tax obligations. This mechanism is expected to improve cash flow, enhance liquidity, and support sustainable airline operations.

Oyedele emphasized that the tax reforms are designed to be part of the solution rather than the cause of the aviation sector’s challenges. He stressed that several long-standing tax-related cost drivers affecting the industry have either been eliminated or structurally addressed under the new tax laws.

He reaffirmed the government’s recognition of the multiple taxes, levies, and regulatory charges confronting the aviation industry and assured stakeholders that ongoing engagements would continue to focus on easing these burdens and strengthening the sector.