Nine months after the Federal Government approved the removal of Value Added Tax (VAT) from air transport, the decision is yet to be implemented. Capt. Nogie Meggison, the President of Airline Operators of Nigeria (AON), had lamented that its members paid at least N10 billion annually as 5 percent VAT to the coffers of the Federal Government through the Federal Inland Revenue Service (FIRS).
According to AON, the remittance of VAT was negatively affecting its operations and it called on the government to emulate other countries in removing VAT from revenues collected from its members. Investigation by Daily Independent revealed that after the government’s announcement of the approval of VAT in June, last year, AON wrote series of letters to the government reminding it of the pronouncement and the need to commence implementation immediately. But nine months after, the government was yet to reply to any of the letters written to it by the leadership of AON. Air transport is the only form of transportation that remits VAT to the government, while rail, road, and marine don’t. Alhaji Muneer Bankole, the Chief Executive Officer (CEO), Med-View Airline Plc, in an interview with Daily Independent, confirmed that the government was yet to implement the VAT removal policy. He explained that the umbrella body of the airline had made attempts to ensure its implementation without success, stressing that the government still needed to inform the Ministry of Finance through memos which, he said, had not yet been done. He called on the government to hasten the implementation to further reduce the financial burden on the operating airlines in the country, saying that while the Nigerian government was collecting five percent VAT from the indigenous airlines, their foreign counterparts that operate in the country don’t remit such, either in the country or at their bases. He said: “As at today, the answer is negative. Nothing is being done in that direction. All we are praying for is still to have the relevant authorities to do the right thing. “The government will still need to talk to the Ministry of Finance, budget and everybody, including the National Assembly, to have it down and become a law.” Besides, a source close to one of the operating airlines told Daily Independent that FIRS still insists on the collection of VAT from the airlines despite the pronouncement of the government. According to the source, FIRS officials said the collection would continue until the airlines fast-tracked the gazetting of the pronouncement. The source, who is a management staff of the airline, also said that the carrier had written series of letters to the government on the issue to no avail. He said: “It’s true that the government publicly made the announcement on June 1, 2018, but nine months after, nothing is heard from the quarters of government. We still remit VAT to FIRS and, most times, it is internationally inflated. “This pronouncement is not different from the one made on removal of waivers on customs duties. “At times, officials of customs still frustrate the waivers, too, through their antics. It is a different thing when a government makes a pronouncement and another thing when that pronouncement is followed with action. We need to walk the talk in this country.” Prior to the Executive Order, AON had threatened that its members would no longer pay VAT with effect from June 14, 2018. The group had said then that the decision was taken after deliberations by the chief executive officers of airlines in the country. The body had argued that Nigerian domestic airline travel was the only mode of transportation paying VAT in the country, while road, rail, marine and international airlines don’t pay, alleging further that some of the domestic airlines were exempted from paying VAT and called for a level playing field for everyone. The body had added: “The AON’s position is that the VAT on airline ticket sales for domestic carriers must be removed completely forthwith as road transportation, rail, marine and international air travel carriers are not subjected to VAT. “Moreover, a situation whereby some airlines are paying VAT, while some other privileged airlines are not paying VAT, and the VAT, which we pay is being used to subsidise our competitors against those that are making payment is unfair.” Few weeks later, President Muhammadu Buhari, through an executive order, had announced removal of VAT from the levies paid by the airlines, which received commendations from all stakeholders and professionals in the sector.