The Federal Government has countered  claims by the Chairman and Chief Executive Officer of Air Peace, Allen Onyema, that Nigeria’s new tax regime will cripple the aviation industry and trigger a sharp rise in airfares.

In an interview on Sunday, Onyema said the taxes include customs duties on imported aircraft, aircraft parts, and engines, as well as VAT on tickets, adding that they will further burden airlines with additional costs.

He said- “There is VAT now on the importation of aircraft. So if you buy an aircraft of $80 million, you are supposed to pay 7.5 percent of $80 million.

“Do the mathematics. From money borrowed from the bank, interest rates are 30 to 35 percent. So you bring in spare parts, you pay 7.5 percent on your spare parts.”

The Air Peace CEO said the airline industry cannot withstand additional burdens under the new tax laws.

“If we implement that tax reform, Nigerian airlines will go down in three months,” he said.

But reacting to the claims by Onyema, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, on Monday, said the claims were misleading and did not reflect the substance of the reforms.

Oyedele made this rebuttal in a statement he posted on his X handle, saying the reforms were being wrongly portrayed.

He said, “Contrary to the claim that the new tax laws will hurt the industry, the reform is part of the solution, not the source of the problem. Several long-standing tax issues driving costs in the sector have been resolved in the new tax laws or are being structurally addressed.”

Oyedele acknowledged that the aviation sector has long struggled with multiple taxes, levies, and regulatory charges, noting that the committee had engaged extensively with airline operators. However, he stressed that the new laws were designed to reduce costs and improve sustainability.

Also, the spokesperson of the Nigeria Civil Aviation Authority, Michael Achimugu, dismissed assertions that domestic airlines pay as many as 18 different taxes, insisting that any airline making such claims had lied.

On aircraft leasing, Oyedele described the existing 10 per cent withholding tax as the “single biggest tax burden” on airlines. He explained that under the old system, the tax was non-recoverable and directly inflated operating costs.

He said, “On a $50m aircraft lease, an airline currently pays $5m in withholding tax, which comes straight out of cash flow. This burden has now been removed and replaced with a rate to be set by regulation, creating a legal basis for either a full exemption or a significantly lower rate. This is a major structural relief for the sector.”

Addressing VAT concerns, Oyedele said the temporary suspension introduced in 2020 came with hidden costs, as airlines were unable to recover input VAT on certain assets, consumables, and overheads.

“Under the new tax laws, airlines become fully VAT-neutral. Any VAT paid on imported or locally procured assets, consumables, and services will be fully claimable. Where there is excess input VAT, the law mandates a refund within 30 days or allows it to be offset against other tax liabilities. This directly reduces cost pressure and improves liquidity,” he added.

He also dismissed claims that the reforms reintroduced import duties on aircraft and spare parts. “Existing exemptions on commercial aircraft, engines, and spare parts remain fully in place. There is no reversal and no new burden introduced under the reforms,” Oyedele stated.

On ticket prices, Oyedele argued that the projected fare hikes were exaggerated. “Even in a worst-case scenario where VAT is not claimable, the maximum impact is 7.5 per cent, not the astronomical figures being suggested. A ₦350,000 ticket would rise to about ₦376,250, not ₦1.7m.”

He added that the reforms provide a framework to reduce corporate income tax from 30 per cent to 25 per cent and harmonise several profit-based levies, such as Tertiary Education Tax, NASENI, NITDA, and Police levies, into a single Development Levy. “This reduces complexity, improves certainty, and ultimately benefits airlines,” he said.

While admitting that airlines still face multiple levies and charges, Oyedele stressed that these were not created by the new tax laws.

“It is incorrect to attribute these charges to the reform,” he said. “The government is actively working with operators and relevant agencies to achieve a lasting solution. Importantly, the harmonisation provisions mean the situation can only improve, not worsen, from 2026.”

Speaking on multiple taxation, Achimugu said, “Any domestic carrier operating domestic flights that says they are paying 18 taxes is a liar. “No domestic carrier pays 18 taxes for domestic flights.”

He further argued that the recent spike in airfares is driven largely by market forces, particularly demand and supply, especially during the festive season. “We understand that the high airfares this period are down to demand and supply. Even if we assume there are 18 taxes and that those taxes increased recently, why is it different in December?”

He added that given the level of government support extended to domestic airlines, repeated attacks on fiscal policy were unjustified. “With the kind of support domestic carriers have received, I see no reason why the government keeps getting thrown under the bus through statements like this,” Achimugu said.