Aviation

Airlines Threaten To Stop VAT Remittance In Nigeria

Indigenous airlines operating in the Nigerian aviation industry have threatened to from June 14, 2018 stop remittance of Value Added Tax (VAT) to the coffers of the Federal Government, saying that the continuous collection of such tax negated the principle of the Federal Government and international best practises in the industry.

The airlines also castigated the Nigerian Civil Aviation Authority (NCAA) over the continuous collection of 5 per cent Ticket Sales Charge (TSC)and Cargo Sales Charge (CSC), saying that this had further driven away passengers from the industry to other modes of transportation especially road.

The airlines, rising from its meeting held yesterday at the Murtala Muhammed Airport Two (MMA2), Lagos, insisted that apart from the operators, none of the other modes of transportation remits VAT to government and wondered why they should be compelled to pay the tax to government and its agencies.

The operators under the auspices of Airline Operators of Nigeria (AON) had in attendance, Barr. Allen Onyema, the Chief Executive Officers (CEOs) of Air Peace; Alhaji Muneer Bankole, CEO, Med-View, Mr. Roland Iyayi, CEO Topbrass Aviation, Capt. Nogie Megission, CEO, Jed Aviation and Chairman of AON, Mr. Obi Mbanuzuo, the Chief Operating Officer (COO) of Dana Air, Mr. Ewos Iroro, the Secretary of AON and top representatives of Firstnation Airways, Overland Airways and others.

Reading out a prepared speech on behalf of the others, Iyayi insisted that collection of VAT by any government agency was illegal, unfathomable and would no longer be tolerated by the airlines.

Iyayi during the question and answer segment emphasied that there was a Presidential Committee set up by the government in August 2017 to address the multiple charges collected from the airlines by the government and its agencies, but decried that almost 10 months after the inauguration, the government was yet to address any of the issues raised by the committee.

He lamented that the current airlines were striving to sustain their operations under the “harsh operating environment,” stressing that collection of such tax further undermined their operations.

According to him, the unfavourable operating environment led to the collapse of over 50 airlines in 30years in the country and maintained that the VAT was no longer sustainable to the airlines.

It further condemned the planned set up of a national carrier with the tax payers’ money and wondered if such an airline would be compelled to remit VAT to government like other airlines in the country.

He said: “VAT is no longer sustainable and equitable to the passengers. Will the intending national carrier be paying VAT to the government?

“There was a Presidential Committee set up in August 2017 to address the issues of multiple charges on the airlines, but about 10 months into the inauguration, the government was yet to do anything about this and the recommendations of the committee. These multiple charges by the government is undermining our operations and we can no longer sustain it.”

Meggison in his submission observed that collection of VAT and imposition of other charges have further driven away potential passengers from the industry.

He explained that because of high airfares, the passengers had also led to consistent reduction in the number of air passengers in the past years.

He observed that data collected from the Federal Airports Authority of Nigeria (FAAN) indicated that passenger traffic reduced by 26.3 per cent in the operating year of 2016 when compared to 2017 while the first quarter of 2018 had also revealed further depletion in passengers’ movement by 10 per cent when compared to the same period in 2017.

He said: “The passengers’ movement is dropping at an alarming rate annually. While our direct competitors are not paying VAT, we are compelled to remit such to government coffers. We want our clients to come back to the sector. We are only helping the masses by saying we won’t remit tax again.”

The body further castigated NCAA for the collection of 5 per cent TSC and CSC, stressing that the agency was already paid for services it rendered.

They insisted that agencies in the sector were never set up for profit making, but had diverted into commercial entities, rather than their critical roles they were supposed to play.

“The agencies have surplus funds beyond what they require. This is why just six persons in the Nigerian Airspace Management Agency (NAMA) could corruptly diverted N6.2bn within 18 months. The government should review the policy of 5 per cent TSC and CSC,” AON said.

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