2020 Finance Act: Nigeria excludes airfares from 7.5% VAT
Nigeria has excluded air flight tickets from payment 7.5 percent Valued Added Tax (VAT) as some airlines prepare to slash airfare on domestic operations.
The exclusion of airfare from VAT was part of the provision in the newly signed 2020 Finance Act, which became effective from January 1, 2021.
Operators in the sector said government has communicated the directive on VAT exclusion, but they are awaiting the instruction from the Federal Inland Revenue Service (FIRS) on the implementation of the policy.
An airline official said substantial reduction in airfares might not be realisable because even with the suspension of 7.5 percent VAT on fares, airlines were still grappling with fluctuating exchange rate as the airport authority moves to increase Passenger Service Charge (PSC).
Currently, airlines are charging from N27,500 to N38,800 on the Lagos-Abuja route.
Airlines are also charging from N27,500 to N42,000 on the Abuja-Lagos route.
On the Lagos-Owerri route, airlines charge from N27, 500 to N33,000. Return fares on Owerri-Lagos route go for between N60,000 and N90,000.
On the Lagos-Port Harcourt route, fares are going for between N42,000 and N80,000.