Airlines Still Pay VAT 6 Months After Presidential Waiver

Eniola Olayemi

Eniola Olayemi

More than six months after the Federal Government issued an Executive Order for the removal of Value Added Tax (VAT) from “All Forms of shared transportation”, airlines in the country are still burdened with VAT payment, Daily Trust can report.

The executive order was announced in June by the immediate former Minister Finance, Mrs. Kemi Adeosun, who said, “Majority of the provisions approved today are actually removing the tax burden and clarifying obsolete and ambiguous areas of tax. So for example for VAT there is to be an exemption for residential property, leases on rental, transport for the general public and life insurance.”

The approval came at a time airline operators had threatened to stop the remittance of VAT to the Federal Government, insisting that aviation is the only mode of transportation still paying the tax.

Immediately the EO was issued, the Airline Operators of Nigeria (AON) issued a statement commending President Muhammadu Buhari and the Federal Government for “listening to the cries of domestic airlines in the country”.

“We believe the decision by the government following the Federal Executive Council (FEC) meeting of June 6, 2018 presents a veritable opportunity for the aviation industry to immediately take advantage of the decision to expedite a White Paper to that effect”, AON chairman, Sir Nogie Meggison, said.

According to him, VAT 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 times.”

But six months down the lane, the expectation of airline operators has been dashed as the Federal Inland Revenue Service (FIRS), the agency empowered to collect tax on behalf of the government, still disturbs them for VAT.

From June till date, it is estimated that the airline operators would have saved up to N2bn if the VAT removal has been implemented.

Going by the 2017 figures released by the Nigeria Civil Aviation Authority (NCAA), local airlines transported 10.1 million passengers making about N94bn in ticket sales.

Out of the figures, five per cent, which is about N4.7bn would have been remitted to the government coffers.

This implies that if the policy has been implemented, more than N2bn would have been saved by airlines in six months.

Chief Operating Officer/Accountable Manager of Dana Air, Obi Mbanuzuo, confirmed that the policy removing VAT for airlines has not been gazetted.

He said, “There was never any implementation. We are still paying VAT till tomorrow. They should implement it. FIRS collect VAT and it is under the Ministry of Finance. As far as FIRS is concerned, there is no instruction to them about removal. So they are still requesting payments. When their controlling ministry, the Ministry of Finance, publishes or gazettes the order, everything will move forward”.

Minister of State for Aviation, Senator Hadi Sirika, had also confirmed during a stakeholders’ forum in Abuja that the policy has not been implemented but assured that the ministry is “liaising with relevant MDAs to ensure the smooth implementation of the Presidential Order”.

However, the Head of Communication and Servicom Department FIRS, Wahab Gbadamosi, said he was not familiar with the Presidential Order, stressing that “FIRS will comply with any directive from the Presidency or any law passed by the National Assembly”.