Airline passengers will get some reprieve as the Federal Government has exempted commercial flight tickets from Value Added Tax (VAT) in the new Finance Bill signed into law by President Muhammadu Buhari.
In the Finance Act 2020 which takes effect from January 1, 2021, the 5% VAT which used to be borne by passengers would be erased and this is expected to reduce the price of flight tickets which sky rocketed in the past weeks and also improve profitability for commercial airlines.
A tax expert in Price Water Cooper Nigeria, Taiwo Oyedele, who was one the members of the committee that drafted the Finance Bill, said that domestic airlines made demands for a number of concessions. He also said that importation of aircraft and spare parts have been exempted from VAT.
On his Twitter handle, he said: “Effective January 1, commercial flight tickets have been exempted from VAT. Next time you fly, cross-check that you are not wrongly charged VAT and hopefully, air fares should come down.”
Airline Operators of Nigeria (AON) have said in the past that its members were paying up to N10billion annually in taxes.
In a related development, the Managing Director of Aero Contractors, Captain Ado Sanusi, has parted ways with the airline after four years effective December 31, 2020.