Arising from their meeting, Chief Executive Officers (CEOs) of domestic airlines in Nigeria have registered their displeasure with the payment of Value Added Tax (VAT) imposed on their services, by the federal Government, claiming the tax has negative effects on the demand for domestic air travel.
The airlines’ CEOs also alleged that it is their sector is the only mode of transportation subjected to pay the tax.
“Nigerian Domestic Airline Travel is the only mode of transportation that is subjected to the Value Added Tax (VAT). This imposition creates a suppression of domestic airline travel demand; therefore resulting in airlines not being able to optimally utilize their aircraft assets and more importantly creating a market distortion. The AON’s position is that the VAT on airline ticket sales for domestic carriers must be removed completely forthwith as road transportation, rail, marine and international air travel carriers are not subjected to VAT;” the airlines stated..
They also alleged that the Federal Government is using the VAT collected from them to subsidise other airlines which are protected from paying the tax.
“Moreover, a situation whereby some airlines are paying VAT while some other privileged airlines are not paying VAT and the VAT which we pay is being used to subsidize our competitors against those that are making payment is unfair,” the airlines alleged.
Meanwhile the airline chiefs have called on the Federal government to immediately institute the necessary mechanisms to ensure that the Customs Duty Waiver to Commercial airline operators as proposed and agreed should be fully effected.
They said this was necessary because the Zero Customs Duty on Commercial Aircraft, Spares and Engines granted them by the federal Government has not been allowed to come into full effect.
This, they alleged, has resulted in airlines having some of their aircraft fleet grounded for days in some cases, thereby resulting in cancelled flights which in event results in chaos at airports to the displeasure of passengers; a situation, they said, “is unacceptable and should be reversed forthwith”.
