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How Customs Tariff, VAT Waivers Will Help Airlines
On January 28, 2021, when Air Peace received its first brand new aircraft from Embraer, the Chairman of the airline, Allen Onyema used the ceremony to let Nigerians know what the Buhari-administration did for the aviation industry. Customs Tariff
He told his audience about the waiver government gave the domestic airlines on Customs Tariff and VAT. This Executive Order excepted Customs tariffs and VAT for the commercial operators.
The waivers are expected to save airlines estimated N3 billion to N5 billion annually. Such money could be ploughed to other areas like training, he estimated.
Air Peace Chairman delivered the speech during the ceremony to receive the new aircraft in Abuja. He explained how the airlines worked with the Ministry of Aviation to secure the Executive Order from President Muhammadu Buhari and its many benefits.
“The Minister of Aviation, Senator Hadi Sirika, the Chairmen of Senate and House Committee on Aviation, Senator Smart Adeyemi and Hon. Nnoli Nnaji and Airline Operators of Nigeria (AON) worked assiduously to help aviation industry secure the waivers.
“I especially thank the President of Nigeria for making it possible. Today as this plane has come in we are not going to pay customs duties on the plane. We are also not paying for 12 others that will come after it. Customs Tariff
“Senator Adeyemi, and Hon. Nnaji, we owe all of you a great deal for this feat. What we at AON did was to present those challenges that have been bringing down airlines in Nigeria. We moved to meet the National Assembly Committees on Aviation. They said the best place to do this is to use a legislation to do it. We met our Minister who took it upon himself to make sure that these things were removed. This was done to enable airlines prosper in this country,” he had said.
He gave kudos to Sirika who pushed the request through the National Assembly and the Presidency. He also ensured that the Executive Order was signed by the President.
The Chairman of the Air Peace, Allen OnyemaFormer CEO of Aero Contractors, Captain Ado Sanusi said that the waiver could save the aviation industry about N3 to N5 billion annually. This will depend on the level of transaction in that particular year. That is if it is effectively implemented by the Nigerian Customs.
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He said that the waiver could be up to five to seven per cent of the cost of aircraft engine. That is if it could be purchased for $5 million and the airline would pay up to 5-7 per cent of that amount. Customs Tariff
Sanusi also explained that the airlines may not gain directly from the waiver on VAT. However, it will bring down the cost of air ticket. This could serve as incentive for more people to travel by air. That is because airlines collect the money from passengers and remit them to government.
“If Nigerian Customs Service implements the waiver well it will save the aviation industry alot of money. That is, between N3 billion to N5 billion annually. However, VAT will not save airlines anything but it will reduce the cost of tickets. Customs Tariff
“This will enable airlines have more cash flow. So if Customs waivers is fully implemented the industry will benefit but right now it is not being implemented well,” he said.
Speaking on the benefits of the waivers, the Director of Engineering, Ibom Air, Lukeman Animaseun, told THISDAY that the waiver would save Nigerian carriers a lot of money, lamenting about how the taxes eroded the finances of Nigerian airlines in the past, stating that Customs still demand some taxes from airlines on aircraft spares and equipment, explaining that what airlines pay now could not be described as duties but they still pay some kind of taxes to Customs.
