- IATA warns reforms will raise airfares, hurt aviation sector
- New tax bills reintroduce VAT on tickets, spare parts, imports
- Aviation agencies fear loss of exemptions and revenue strain
The International Air Transport Association (IATA) and the Federal Government are clashing over Nigeria’s newly signed Tax Reform Acts, with airlines warning the bills will increase costs and destabilise the aviation industry.
According to Eko Hot Blog, IATA is strongly opposed to key provisions in the Tax Reform Acts that are set to reintroduce Value Added Tax (VAT) on air travel tickets, aircraft spare parts, and imported aviation equipment. The association argues these measures will reverse tax waivers previously enjoyed by airlines, leading to higher operating costs and likely causing ticket prices to spike.
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Airline operators say the reforms will burden a sector already struggling with multiple levies, customs duties, and inflationary pressures. They warn that increased taxes on critical imports like aircraft and parts could disrupt maintenance, reduce safety margins, and slow down operational efficiency. The reintroduction of VAT, in particular, is feared to violate international civil aviation norms and would make flying more expensive for passengers.
The Federal Government, on its part, maintains that the Tax Reform Acts are essential for boosting revenue, streamlining tax administration, and promoting fairness in contribution to national development. Officials argue that the previous tax regime had too many exemptions and loopholes, limiting revenue collection. They believe that reforms will help fund infrastructure, safety oversight, and other sectoral needs.
Still, aviation agencies and industry stakeholders are concerned about the pace and timing of implementation. With the Acts coming into force in January 2026, they are calling for clearer guidelines on how exemptions will be managed, what support will be provided to mitigate costs, and whether phased implementation is possible to avoid shocks.
Observers note that if measures like VAT on tickets are enforced without buffering mechanisms, there could be a drop in passenger numbers, reduced air travel demand, and possible layoffs across airlines. Some airlines suggest that unless the government revises certain clauses, the reforms may do more harm than good for the sector.
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