The Federal Government has dismissed claims by Air Peace Chairman and Chief Executive Officer, Allen Onyema, that Nigeria’s new tax regime would cripple the aviation industry and lead to a sharp increase in airfares.

Reacting to Onyema’s remarks during a Sunday interview on Arise News, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, said on Monday that the assertions were misleading and failed to reflect the true nature of the reforms set to take effect in January 2026.

Oyedele made the clarification in a statement shared on his X handle on Monday, less than 24 hours after Onyema’s comments.

Onyema had warned that the Nigeria Tax Act would reintroduce a 7.5 per cent Value Added Tax on aircraft imports, engines and spare parts—levies that were suspended in 2020 during the COVID-19 pandemic, and said the move could drive domestic economy fares from around N350,000 to more than N1 million.

However, Oyedele said the reforms were being misrepresented.

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 said the aviation industry has for years grappled with numerous taxes, levies and regulatory charges, adding that the committee held wide-ranging consultations with airline operators.

He, however, maintained that the new laws are aimed at lowering costs and ensuring long-term sustainability.

On aircraft leasing, Oyedele described the existing 10 per cent withholding tax as the “single biggest tax burden” on airlines, explaining that under the old regime the levy was non-recoverable and directly drove up operating costs.

“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,” he noted.

Oyedele said the temporary suspension introduced in 2020 carried 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 stressed.

He also rejected claims that the reforms had 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 added.

He added that the reforms establish a framework to cut corporate income tax from 30 per cent to 25 per cent and harmonise several profit-based levies—including Tertiary Education Tax, NASENI, NITDA and Police levies—into a single Development Levy.

“This reduces complexity, improves certainty, and ultimately benefits airlines,” he said.