‘Why tax waiver on airplane, parts is big deal for local carriers’
Recent decision by the Federal Government to grant waiver on importation of commercial planes and spare parts for indigenous airlines is expected to save airlines huge billions of naira annually.
This, according to experts, would relieve indigenous carrier eliminate the burden of import duty and Value Added Tax (VAT) payment amidst the unending grumbling over multiple charges.
Local airlines have consistently complained over what they called inhibitive operating environment with multiple charges by agencies, scarcity and high cost of fuel known as Jet A1, among others. However, the tax waiver would go a long way in reducing the burden of local carriers, according to operators.
It would be recalled that the Nigeria Customs Service (NCS) in a letter dated 20th June, 2016 informed airline operators that the policy on zero import duty for importation of commercial aircraft and their parts is still in place.
The NCS’s communication to the airline operators stated inter alia that: “I am directed to inform you that by virtue of the Federal Government 2013 Fiscal Policy measures, Ref No. BD.12237/ S.1008/T/11 dated 15th January, 2013, all commercial aircraft and itss spare parts imported for use in Nigeria shall attract import duty rate of zero per cent (0%) and zero per cent (0%) VAT respectively.”
The letter added: “I am further directed to inform you that the Honourable Minister of Finance letter Ref. No. BD/ FP/TT/50/1/113 dated 20th March, 2015. Approval for the implementation of the ECOWAS Common External Tariff (CET) 2015 - 2019 and 2015 Fiscal Policy measures (National List) confirmed the extension of the 2013 Fiscal Policy measures.”
The announcement was received by indigenous airlines with euphoria as virtually all the carriers have one spare part or the other to import like tyres, rotaries, engine oil, among others.
The implication of the new policy is that airlines would save about 10 per cent paid as import duty and VAT on these spare parts.