The Federal Government has issued an Executive Order for the removal of Value Added Tax (VAT) from “All Forms of Shared Transportation,” which we believe includes air transport.
The Airline Operators of Nigeria (AON) appreciated President Muhammadu Buhari for listening to the cries of domestic airlines in the country by issuing an Executive Order for the removal of VAT from “All Forms of Shared Transportation,” which includes air transport.
Nogie Meggison, AON chairman, said: “We as Nigeria have been crying out for decades now for discussions on the immediate removal of VAT from domestic air transportation in line with global best practice, but we have barely been heard over the years. VAT is an added burden on our passengers who have limited disposal funds and have reached their elastic point in this difficult time in the nation’s economy.
“This adversely affects the sector by reducing the number of those who can afford to travel by air due to high fares in this tough economic time. This has been shown to be true according to a recent report from the Federal Airports Authority of Nigeria (FAAN) that passenger traffic dropped by 27% in 2017 and by another 7% in the first quarter of 2018 making it a total of 34% drop in passenger traffic within a span of one year.”
Furthermore, he noted that: Domestic Air transportation in Nigeria is the only mode of commercial transportation that pays VAT. Road, rail, marine and even foreign airlines operating in Nigeria don’t pay VAT in their home country or in Nigeria with reference to an information circular by the Federal Inland Revenue Service (FIRS) which grants them VAT exemption (Information No.: 9701; Circular Dated 1st Jan. 1997); Part L (b) No. 8.
VAT on commercial air transportation is a huge departure from what obtains worldwide and an increased burden on the Nigerian travellers. Ghana, Benin Republic, Togo and Cote d’Ivoire located next door to us have all abolished VAT for air transportation.
He said the recent decision by the Federal Government to remove VAT from Domestic Air Transportation will go a long way to bring succour to groaning Nigerian travellers to be able to afford to travel by air and the growth in demand for domestic air travel will lead to the creation of jobs by the whole air transport service chain (airlines, airports, ground handlers and catering companies) as well as increase revenues for government.
Businessday