FG reneges on plan to stop 5% VAT in air fares

FIRS unaware of Executive Order
The Federal Government appears to have reneged on the plan to suspend mandatory five per cent Value Added Tax (VAT) on airfares in the country as contained in the Executive Order issued in June.

The order is yet to be implemented, even as the Federal Inland Revenue Service (FIRS) that collects taxes on behalf of the government claims to be unaware of such directive two months on.

At a meeting of Vice President Yemi Osinbajo with airlines operators, he pledged to address “killing” multiple taxation and set up of a presidential review committee for that purpose.

Airlines operators in Nigeria, unlike their counterparts around the world, pay no fewer than 37 sundry charges, among which are a five per cent Value Added Tax and another five per cent Passengers Service Charge.

As at the last check, Nigeria remains the only country that still charges VAT on air transport. The VAT plus 36 other charges, according to the airlines, account for at least 40 per cent of total revenue, leaving the carriers heavily indebted, in financial distress or both, in most cases.

The Guardian’s monitoring of airfares in the last two months showed no downward review of cost. While airfares remain stable on some routes, the prices went up by some notches on most others, especially the heavy traffic Lagos, Abuja and Port Harcourt routes.

The Chief Executive Officer (CEO) of Med-View Airlines Plc, Muneer Bankole, said he heard of the removal, but it was yet to be implemented.

“Since we heard about it, we have started talking to FIRS, but they are still chasing us (to pay VAT).”

He said good as the intention seemed, nothing had really changed to realign Nigerian aviation with global best practices.

“Definitely, you know that commercial operation like airline has international connection; you don’t pay VAT anywhere in the world. So, let us do the right things here. All these charges; VAT and taxes don’t apply to aviation because they don’t help the airlines’ business. That is why our airlines are nose-diving and government agencies just sit down looking.

“They (regulatory agencies) should get out of this colonial approach. Every government agency should go out to get money and work as real service provider. That is the way to go. When you say you are committed to paying five per cent to this, four per cent to that, three per cent to another and so on, then you are still in the colonial era,” Bankole said.

Dana Air Media and Communications Manager, Kingsley Ezenwa, said the airline would be more than happy to plough back the gains of VAT removal to the business and ticket fares subsidy, “but that may not happen soon.”