The Nigerian aviation industry has raised alarm over the new Tax Reform Act 2025, which reintroduces Value Added Tax (VAT) and customs duties on aircraft, engines, spare parts, and passenger tickets from January 1, 2026.
LensNews confirmed that the law, recently signed by President Bola Tinubu, removes long-standing tax exemptions that airlines had relied on to manage costs in an already fragile operating environment. The Nigeria Revenue Service (NRS) said the reform is part of a wider push to harmonise taxes and expand the country’s narrow revenue base.
Airline Operators of Nigeria (AON) warn that the policy could ground the industry within days of implementation. They argue that the extra charges will inflate ticket prices, push passengers back to road travel, and trigger job losses across the sector. Some operators also say the measure conflicts with international treaties under ECOWAS and the International Civil Aviation Organisation (ICAO), which discourage such taxation on aviation.
The government insists VAT is a consumption tax that will be borne by passengers rather than airlines, and stresses that refund mechanisms exist for input VAT. But industry experts caution that in practice, the financial weight will fall squarely on airlines, given rising fuel costs, forex shortages, and weak consumer purchasing power.
For now, the aviation sector is pressing for urgent dialogue with the Federal Government, warning that without adjustments, the new tax regime could destabilise one of Nigeria’s most strategic industries.
