Tension as IATA, FG Lock Horns Over Tax Reforms

By Sesi Noah  The International Air Transport Association (IATA) has kicked against the Federal Government’s new Tax Reform Acts, describing...

By Sesi Noah 

The International Air Transport Association (IATA) has kicked against the Federal Government’s new Tax Reform Acts, describing them as a violation of global aviation rules. According to IATA, the reforms contradict guidelines set by the International Civil Aviation Organisation (ICAO) and the Economic Community of West African States (ECOWAS), both of which prohibit member states from slamming extra taxes on air passengers and goods.

The Federal Government, however, insists the new taxes—set to take effect on January 1, 2026—will strengthen the country’s aviation sector. But IATA is demanding a review to ensure Nigeria’s laws stay in line with international agreements already signed.

The clash came to light during a Business Webinar themed “Nigeria Tax Act (2025) and the Aviation Industry” hosted by Aviation and Allied Business in collaboration with the Federal Inland Revenue Service (FIRS).

Speaking at the session, IATA’s Area Manager for West and Central Africa, Dr. Samson Fatokun, stressed that aviation is a global business governed by international treaties. He reminded participants that in November 2024, Nigeria joined other West African countries in signing a pact to cut travel costs across the region—yet the new tax policy appears to do the opposite.

“We need to align our tax laws with ICAO and ECOWAS regulations,” Fatokun said. “If not, we risk contradicting the very agreements we signed. Nigerian tax authorities must take into account the treaties guiding the aviation industry.”

But defending the reforms, Mrs. Nkechi Umegakwe, Assistant Director at the Nigeria Revenue Service, said the new system is designed to improve government revenue through VAT recovery, better cash flow for businesses, and stricter compliance using digital invoicing and tracking.

She explained that airlines and aviation-related businesses will now have to pay Value Added Tax (VAT), including on imports like aircraft, engines, and spare parts.

“VAT is a consumption tax borne by end users, not suppliers,” Umegakwe said. “Once the reforms are in place, compliance becomes critical—it helps businesses avoid penalties, maintain their reputation, and keep operations running smoothly.”

Photo credit: Vanguard News