Airlines Operators Commend FG for Exemption from VAT Payment

*Government Extends Completion Date for Enugu Airport Terminal
Chinedu Eze
Airline Operators of Nigeria (AON) has commended the federal government for issuing an Executive Order for the removal of Value Added Tax (VAT) from all forms of transportation that it believes includes the air transport sector.

AON in commending the federal government thanked President Muhammadu Buhari, and called for urgent gazetting of the new policy, which the operators said would bring down fares so that more Nigerians would travel by air.

AON Chairman, Nogie Meggison, said: “We as Nigeria have been crying out for decades for discussions on the immediate removal of VAT from domestic air transportation in line with global best practices, 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.”

Meggison said the payment of 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 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 per cent in 2017 and by another seven per cent in the first quarter of 2018, making it a total of 34 per cent drop in passenger traffic within a span of one year,” Meggison said.

He stressed that before government’s decision to scrap the payment of VAT for the transport sector, the air transport was the only mode of commercial transportation that paid VAT, noting that 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.”

AON, therefore, said requesting for payment of VAT on commercial air transportation was a huge departure from what obtains worldwide and an increased burden on the Nigerian travellers, remarking that Ghana, Benin Republic, Togo and Cote d’Ivoire had all abolished VAT for air transportation.

“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 in revenues for government.

Meanwhile, President Buhari, yesterday said the completion of the international terminal at the Akanu Ibiam International Airport, Enugu would be delayed as a result of reduction in the cost of construction in the 2018 budget.

The president made this known through his twitter handle, saying: “The provision for construction of the terminal building at Enugu airport was cut from N2 billion to N500 million, which will further delay the completion of this critical project.”

The project which was being executed directly by the federal government started in 2012 before the new terminals at the four major airports in Lagos, Abuja, Kano and Port Harcourt kicked off in 2013.