Airlines still pay VAT 6 months after presidential waiver

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 report.

The executive order was announced in June by the immediate past
Finance Minister, 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 collects
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”.

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